It is easy to get lost in the sea of tax documentation when it comes to filing your taxes. But knowing which form is right for you and how to fill it out will help you stay out of financial troubles. Here is essential information that will shed light on one of the common issues among taxpayers - W9 vs W2.
W2 is one of the most important tax documents. It shows your earnings for the year and the amount of taxes withheld from your paycheck. The form is created for employers to report the salary and wages they’ve paid to their employees. The information included on it is important for an employee who uses it when filing his individual tax return.
If you’re an independent contractor you must get your fillable W9. Unlike W2 this form identifies the person as a freelancer. It means that a business that hires a contractor doesn’t have financial control over the party. In fact there is no employer-employee relationship between the company and the contractor. The information requested on the form is brief. It asks an individual for his name, address, TIN or SSN and a kind of business entity he runs.
You can print w9 out or send it electronically to the recipient. W2 can also be efiled or completed on paper. The difference is that W2 is sent to the employee by the 31st of January every year and to the Social Security Administration until the end of February. Neither of the forms is sent to the IRS. So the main criterion that defines whether you need Wage and Tax Statement or Request for Taxpayer Identification Number and Certification is your work status. Turn to the company you’re working for to clarify how the work you perform is classified. Or visit IRS website and learn more details there.