Your guide to understanding W-9 and 1099 forms

  • Updated

What is a W-9 Form?

A W-9 form is an Internal Revenue Service (IRS) tax form that provides a vendor's Taxpayer Identification Number (TIN) to you when you pay them. The form is used to capture the following information:

  • Used to collect accurate tax information from your independent contractor and freelancer vendors.
  • Contains your vendor's legal name, business name, and tax classification.
  • This information helps you report payments made to vendors to the IRS.

We recommend you secure a signed W-9 form from your freelancers and contractors before issuing their first payment. 

To learn more about requesting W-9 forms from your vendors, please see the following guide.

Do you already have a W-9 form from your vendor? To find out how to upload a completed W-9 form, please see this guide for instructions. 

If you have paid a 1099 vendor less than $600 through Melio but also paid them an additional amount outside of Melio for a combined total of $600 or more, you must still request a W-9 form from them. For more information on handling these vendors, please see the following guide.

What is a 1099 Contractor?

A 1099 contractor is a self-employed individual or business that provides services to another company. 1099 Contractors are:

  • Not a regular employee
  • Paid per project or service
  • Responsible for their own taxes
  • Typically work with multiple clients
  • Receive their payments without their taxes being withheld

Can I use Melio to pay them? 

Yes! Freelancers and contractors are a vital part of growing your business. Melio is the perfect solution to pay them quickly and easily. Plus, you can pay them both domestically and internationally. 

Choose your preferred payment method - ACH bank transfer, credit card, or debit card. Then, your contractors and freelancers choose how they’d like to receive the payment: via paper check or ACH bank transfer. They don’t even need a Melio account to accept it.  

To comply with IRS regulations, you must file a 1099 report by January 31st of every year*. This report includes any independent contractor who received $600 or more from you in the previous year. 

*Please see the IRS website for further information.

Understanding 1099 Forms

1099 forms are IRS documents that report various types of income outside of standard wages. These forms are filed with the IRS each tax year, and copies are sent to contractors.

Who Receives a 1099?

  • Independent contractors
  • Freelancers
  • Consultants
  • Self-employed professionals

When is a 1099 Issued?

You must issue a 1099 form for any independent contractors or 1099 contractors if you have paid $600 or more in the previous year. 

Types of 1099 Forms

  • 1099-NEC: For reporting non-employee compensation*
  • 1099-MISC: For miscellaneous income like rent or royalties*

*Please see the IRS website for further clarification. 

Best Practices for Vendor Payments

1. Collect the W-9 form before the first payment

2. Verify vendor information

3. Keep accurate records

4. Issue 1099 forms by January 31st following the tax year*

* Please see the IRS website for further clarification. 

Boost and Core users can easily e-file 1099 forms using Melio’s sync with Tax1099*. To learn more about this, please see our 1099 e-filling with Tax1099 guide.

* Standard Tax1099 fees apply

If you are a Go user and wish to use this service, upgrade your plan to sync with Tax1099. 

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