What is the difference between W9 vs W8 tax forms?

W9s and W8s are both IRS forms businesses and self-employed workers use to determine tax requirements. But they have key distinctions employers need to keep top of mind to avoid misclassification or compliance issues. If you’re working with contractors domestically or worldwide, this article unpacks these crucial forms’ similarities and differences along with providing information about when—and how—to fill them out. 

What is a W9 tax form?

A W9 (Request for Taxpayer Identification Number and Certification) is a tax form that businesses use to collect information about independent contractors to whom they send payments. 

Companies use Form W9 to collect names, addresses, federal tax classification, exemptions, and tax identification numbers (TIN) from W9 contractors, who are US citizens or residents and need to pay taxes in the US to the IRS.

Here’s how it works:

• Employers send Form W9 to the contractors at the beginning of their collaboration, to request taxpayer information.
• W9 contractors fill in the W9 forms and send them back to the employers.
• Employers use the information from the W9 form to fill out 1099 forms, and then send the 1099 forms to the contractors every January, for the previous year.
• Contractors use the 1099 forms to calculate and pay the correct amount of taxes for themselves as self-employed workers.

W9s help the contractors handle taxes, since employers don’t withhold income or pay taxes for W9 contractors.

What are W8 series tax forms?

W8 forms are tax documents for non-residents and non-citizens of the US to confirm their foreign tax ID status. 

Depending on where the W8 contractors live, they will pay different amounts of taxes, depending on the tax treaty benefits the US has signed with their countries of residence. If the contractors fail to submit the form, they will have to pay the full tax rate of 30%.

Employers will send a W8 form to freelancers, contractors, or vendors that don’t have US citizenship or live outside the US. W8 contractors will then fill the forms out and send them back to the employer. 

There are five variations of W8 forms: 

• W-8BEN—Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)—for foreign individuals to verify their status as a non-resident of the US, and claim the tax treaty benefits that apply to their country of residence
• W-8BEN-E—Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)—for foreign entities, used for the same purpose Form W-8BEN has for individuals
• W-8ECI—Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States—for foreign individuals with income related to a US-based trade or business
• W-8IMY—Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain US Branches for United States Tax Withholding and Reporting—for individuals and entities that serve as qualified intermediaries and flow-through entities on behalf of a foreigner
• W-8EXP—Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding and Reporting—for foreign foundations, governments, and organizations with tax exemptions to verify foreign status and claim reduced tax withholdings

The differences between W8 and W9 forms

Learn about the key differences between W8 and W9 forms below:

Purpose

• W9: Helps US contractors calculate and pay their self-employment taxes
• W8: Proves tax status of non-US residents who work with US businesses, enabling them to claim exemptions for certain withholdings and calculate their tax contributions

Who uses them

• W9: For independent contractors with US residence and citizenship.
• W8: For non-citizen or non-resident contractors, freelancers, and vendors. They also apply to American citizens who don’t reside in the US.

Tax withholding

• W9: Employers don’t withhold taxes for W9 workers. 
• W8: Employers determine whether any tax withholdings apply depending on the form type, info, and applicable tax treaty.

IRS Reporting

Neither form is filed directly with the IRS. Instead:

Employers use W9s to fill out and send Form 1099s to contractors, so they can calculate and file their own taxes.

Employers use W8s at the end of the year to report the payments made to the non-resident contractors with the IRS Form 1042-S. Businesses need to handle the W8 forms carefully and choose the correct form for tax purposes when hiring independent contractors worldwide.

Expiration

W9 forms don’t expire as long as the information on the forms is correct. A replacement may be necessary if the info needs to be updated.

W8 forms have different validity periods and conditions:

• W-8BEN is valid for three years, or until all the information on the forms is correct, unless mandated otherwise.
• W-8BEN-E is valid for three years, or until all the information on the forms is correct, but under certain conditions, it may be valid indefinitely as long as the information is correct.
• W-8ECI is valid for three years, or until all the information on the forms is correct.
• W-8EXP is valid indefinitely as long as the information on the form is correct, except in special circumstances.
• W-8IMY is valid indefinitely, as long as the important circumstances don’t change and all of the information on the form is correct.

How to fill out W-8BEN and W9 forms

Both forms are available on the IRS website.

Filling out form W9

Here's the IRS Form W9. And here’s how it should be filled out:

• Line 1: Contractor’s Full legal name
• Line 2: Contractor’s Business name (blank if not applicable)
• Line 3: Contractor’s Federal tax classification (Individual, sole proprietor, LLC, or corporation) 
• Lines 5 and 6: Contractor’s current complete address (their city, state, and ZIP code)
• Part I: Contractor’s Social Security Number (SSN) or Taxpayer Identification Number (TIN)
• Part II: Contractor’s signature and date, confirming the information provided

Filling out form W-8BEN (For non-US Residents)

There are three parts to fill for the IRS Form W-8BEN:

• Part I: Enter name and country of contractor’s citizenship (Line 3), as well as their permanent residence address, and Individual Taxpayer Identification Number (ITIN) or foreign tax identification number.
• Part II: In this section, contractors claim tax treaty benefits depending on their country of residence and whether that country has a tax treaty signed with the US.
• Part III: To validate the form, contractors need to put their signature and date onto the Form W8 (both electronic and hand-written are acceptable).

When should W9 and W8 forms be collected?

Contractors should receive a Form W9 from businesses during onboarding, before receiving any payments.

W8 forms, meanwhile, should also be received as early as possible, before you make the first payment. Otherwise, you may need to withhold the full 30% tax rate from their income. 

Before sending out the forms, keep the following compliance considerations in mind:

Verify tax residency and citizenship status

Form W9 is intended for US citizens and residents, while W8 forms are for foreigners without citizenship or residency.

Determine the W9 or the appropriate W8 form type

You’ll use Form W9 if the worker is an independent contractor, not an employee (Rippling’s Employee Misclassification Analyzer can help determine their status).

The correct type of W8 depends on worker classification, location, whether the signee is the final recipient or an intermediary, and whether they’re an individual or an entity.

Review and validate tax forms

Use the IRS tools to validate the information provided on W9s and W8s for accurate tax withholding. 

Keep accurate tax documentation

For accurate record-keeping, consider using payroll automation software to store contractor information, remind you when W8s expire, and help you stay compliant with tax filing obligations and payroll requirements.

Strengthen local and global tax compliance with Rippling

With Rippling, you can compliantly hire and pay your global workforce and easily send the right tax forms to employees and contractors—both domestically and internationally—from the same system. 

The all-in-one workforce management platform lets you onboard global contractors in 185+ countries within minutes. They can sign their contractor agreement, enter payroll details, get a company email address, and more—all in one workflow.

Rippling automatically generates and distributes 1099 tax forms to your contractors. And all past 1099 forms are stored within your Rippling account. 

Rippling houses your contractor data alongside your full-time employees' HR and IT data. Since your entire workforce is in a single platform, taxes and other reporting are one-click simple. Such integration also means that contractors get paid whenever you run payroll. Get the details after the jump.

W9 vs W8 forms FAQs

What is a W8 form used for?

W8 forms prove the foreign status of non-residents and non-citizens, so they can claim tax treaty benefits. Since the US has different tax treaties with each country worldwide, the amount of taxes will vary.

What is the W9 form used for?

The W9 form is used to collect Taxpayer Identification Numbers (TIN) from independent contractors and freelancers the business is hiring. Companies then use the information from the W9 form to fill out Form 1099, so the W9 filers can pay their income taxes correctly. 

What happens if I don’t collect W9 or W8 forms?

If W9 contractors don’t fill out the W9 form, they won’t receive Form 1099 which contains the correct information about their taxable income. As a result, they may fail to pay the taxes correctly. 

If W8 contractors don’t file the W8 forms, they need to pay the full 30% tax rate that applies to non-citizen and non-resident contractors doing business with US entities.

How long are W9 and W8 forms valid before they need to be updated?

Form W9 doesn’t expire and is valid as long as the information it contains is correct.

W-8BEN, W-8BEN-E, and W-8ECI forms are usually valid for three years or as long as the forms contain correct information.

W-8EXP and W-8IMY are usually valid indefinitely provided that the information doesn’t change.

This blog is based on information available to Rippling as of November 14, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.