How to Pay Someone With an ITIN: Forms, Withholding, and Reporting

To pay someone with an ITIN, first figure out whether they’re a resident alien or a non-resident alien for tax purposes, then collect the matching tax form (W-9 or W-8BEN), apply the correct withholding (none, 24% backup, or 30% Chapter 3), and report the payments at year-end on Form 1099-NEC or Form 1042-S. That single resident/non-resident distinction drives every other decision. One threshold to note up front: for payments made during 2026, the reporting trigger for Form 1099-NEC rose from $600 to $2,000 in nonemployee compensation.¹

What an ITIN Actually Authorizes

An ITIN is a nine-digit number starting with 9 that the IRS issues to people who need to file or be reported on a federal tax return but can’t get a Social Security Number.² It exists for tax administration. It does not authorize the holder to work in the United States, and you cannot accept an ITIN in place of an SSN on Form I-9.³

That means the process below assumes you’re paying an independent contractor. If the working relationship is actually employment, an ITIN alone will not solve your paperwork problem, and you have a work-authorization question to resolve before any tax form matters.

Resident Alien or Non-Resident Alien

Ask this first. It changes the form you collect, the rate you withhold, and the return you file.

A resident alien is treated as a U.S. person for tax purposes. Pay them the way you’d pay any domestic contractor: collect a W-9, withhold nothing under normal circumstances, and report on Form 1099-NEC.

A non-resident alien is a foreign person for tax purposes. Collect a W-8BEN, withhold 30% under Chapter 3 of the Internal Revenue Code unless a treaty reduces the rate,⁴ and report on Form 1042-S rather than Form 1099-NEC.⁵ Getting this classification wrong means filing on the wrong form and withholding at the wrong rate.

Collect the Right Form Before the First Payment

Form W-9 for Resident Aliens

A resident alien contractor should complete Form W-9. They enter their legal name, their ITIN in the taxpayer identification number field, and their federal tax classification, then sign the certification.⁶ Get it on file before you send any money. A properly completed W-9 shields you from backup withholding liability and gives you what you need for the 1099-NEC.

Confirm the name on the W-9 matches the name the IRS has on record for that ITIN. Mismatches trigger a B-Notice months later and force you into backup withholding you could have avoided.

Form W-8BEN for Non-Resident Aliens

A non-resident alien contractor should complete Form W-8BEN. This form establishes foreign status and lets the contractor claim a reduced withholding rate under a tax treaty between the U.S. and their home country, when one exists.⁷ Without a valid W-8BEN you withhold at the full 30%. Many treaties cut the rate on independent personal services income, sometimes to zero, so the form is worth doing correctly.

Withholding: Three Scenarios

Zero Withholding (Resident Alien, Clean W-9)

When a resident alien contractor has given you a valid W-9 with a matching ITIN, you generally withhold nothing. Independent contractors handle their own estimated tax payments.

Backup Withholding at 24% (Resident Alien, Something Wrong)

Backup withholding kicks in only when the paperwork breaks down:

The contractor didn’t provide an ITIN or SSN on the W-9.
The IRS sends you a B-Notice saying the ITIN doesn’t match its records.
The IRS notifies you that the contractor has underreported income.

In any of those situations, withhold 24% from each payment until the issue is resolved.⁸ After a B-Notice, withholding begins 30 days after you receive the notice and continues until the contractor gives you a corrected number. Skip backup withholding when it’s required and you’re personally on the hook for the full amount, plus interest and penalties.⁹

The 30% applies to gross compensation. Pay a non-resident alien contractor $5,000 with no treaty reduction: send $3,500 to the contractor, remit $1,500 to the IRS. The IRS holds you liable for any shortfall.

How to Send the Money

The IRS doesn’t prescribe a payment method. Check, ACH, wire, or digital platform all work. What matters is that your records show the date, amount, and recipient for each payment so year-end reporting is accurate.

Year-End Reporting

Form 1099-NEC (Resident Alien Contractors)

For 2026, file Form 1099-NEC when total nonemployee compensation to a resident alien contractor reaches $2,000 or more for the year.¹ The old $600 threshold no longer applies to payments made after 2025. Copy A goes to the IRS, Copy B goes to the contractor, and both are due January 31 of the following year.¹⁰

If you file 10 or more information returns in total across all form types during the year, you must file electronically.¹ The 10-return threshold is an aggregate count, so most businesses paying multiple contractors will need to e-file.

Form 1042-S (Non-Resident Alien Contractors)

Payments to non-resident aliens go on Form 1042-S, not Form 1099-NEC. File it even if you withheld nothing because a treaty exemption applied.⁵ The IRS filing and recipient copy are both due March 15 of the following year. If you file any 1042-S, you also file Form 1042, the annual withholding tax return that reconciles amounts withheld from foreign persons for the year.

Form 945 (Backup Withholding)

If you performed backup withholding on any nonpayroll payments during the year, report the total on Form 945. It’s due January 31 of the following year, with an automatic extension to February 10 if you deposited the full amount on time.¹¹ You file Form 945 only for years in which you actually withheld, or were required to withhold, federal income tax from nonpayroll payments.¹²

What Late or Wrong Filings Cost

For information returns due in 2026, the per-return penalties are:

Up to 30 days late: $60 per return
31 days late through August 1: $130 per return
After August 1 or never filed: $340 per return
Intentional disregard: $680 per return

These apply separately to each IRS filing and each payee statement, so a single late 1099-NEC can generate two penalties.¹³ Filing on time with an incorrect ITIN is also penalizable, which is why the W-9 or W-8BEN needs to be correct before the first payment.

Check Whether the ITIN Has Expired

An ITIN that hasn’t appeared on a federal tax return for three consecutive years expires on December 31 of the third year.¹⁴ If a contractor gives you a W-9 with an expired ITIN, expect a TIN mismatch notice down the road, which pushes you into backup withholding.

Renewal is the contractor’s job: they submit Form W-7 with the “Renew an existing ITIN” box checked. Processing takes time. Ask about the status of the ITIN before the first payment. If the contractor knows it has expired, start withholding at 24% now rather than waiting for the IRS to catch up.

Make Sure This Person Really Is a Contractor

The biggest trap here isn’t about ITINs. It’s misclassifying a worker as an independent contractor when the relationship actually looks like employment. Labels don’t control the outcome. If you direct when, where, and how the person works, the IRS may reclassify them as an employee, and the tax consequences under Section 3509 of the Internal Revenue Code are steep, especially if you also failed to file the required information returns.¹⁵ The IRS runs a Voluntary Classification Settlement Program for businesses that discover a misclassification and want to correct it going forward.¹⁶

And again: an ITIN cannot be used on Form I-9 to establish employment eligibility.³ If the relationship is really employment and the worker only has an ITIN, no tax form fixes the underlying work-authorization issue.

1
IRS. Publication 1099 General Instructions for Certain Information Returns (2026)
2
Cornell Law Institute. Individual Taxpayer Identification Number (ITIN)
3
USCIS. Instructions for Form I-9, Employment Eligibility Verification
4
Office of the Law Revision Counsel. 26 USC 1441 – Withholding of Tax on Nonresident Aliens
5
Internal Revenue Service. Instructions for Form 1042-S (2026)
6
Internal Revenue Service. Form W-9 (Rev. March 2024) Request for Taxpayer Identification Number and Certification
7
Internal Revenue Service. Instructions for Form W-8BEN
8
Office of the Law Revision Counsel. 26 USC 3406 – Backup Withholding
9
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
11
Internal Revenue Service. Publication 509 (2025), Tax Calendars
12
Internal Revenue Service. Instructions for Form 945 (2025)
13
Internal Revenue Service. Information Return Penalties
14
Internal Revenue Service. How to Renew an ITIN
15
Office of the Law Revision Counsel. 26 USC 3509 – Determination of Employer’s Liability for Certain Employment Taxes
16
Internal Revenue Service. Independent Contractor (Self-Employed) or Employee?