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Forms 1099 report non-employee income to the recipient of the money and to the IRS. Income reported on a 1099 is then entered on Form 1040 with several other financial details to determine whether you owe tax or can expect a refund. All taxpayers must file a 1040 if they earn more than a certain threshold of income.

If the independent contractor doesn't provide you with Form W-9 you must withhold tax from payments to that person. This is referred to backup withholding and should be withheld at the rate of 24% and then submitted to the IRS.

As an independent contractor, vendor, freelancer or other individual receiving nonemployee compensation, you typically do not work for the person or business as an employee. If you don't work as an employee, you'll typically have your earnings reported on a Form 1099-NEC and will need to prepare a W-9.

When a vendor has failed to provide the proper W-9 documentation, a business owner is still allowed to process a year-end Form 1099-Misc form, reporting all income to the vendor. This allows the business to deduct the expenses properly.

Form W-9. If you've made the determination that the person you're paying is an independent contractor, the first step is to have the contractor complete Form W-9, Request for Taxpayer Identification Number and Certification.

As an independent contractor, vendor, freelancer or other individual receiving nonemployee compensation, you typically do not work for the person or business as an employee. If you don't work as an employee, you'll typically have your earnings reported on a Form 1099-NEC and will need to prepare a W-9.