I-9 vs W-9: Which Form for Which Worker, Deadlines, and Penalties

Choosing between Form I-9 and Form W-9 comes down to one question: is the worker your employee or an independent contractor? Use Form I-9 to verify employment authorization for anyone you hire onto payroll, and use Form W-9 to collect a taxpayer identification number from a contractor, freelancer, or vendor you pay for services. The forms are not interchangeable, and they answer entirely different federal requirements.

Which Form for Which Worker

Every person hired for wages in the United States must complete Form I-9, regardless of citizenship. The requirement traces to the Immigration Reform and Control Act of 1986 and applies equally to U.S. citizens and noncitizens.¹ Employees also fill out a Form W-4 so you can withhold income tax, but the I-9 is the verification piece.

If you pay someone who is not your employee, you request a Form W-9 instead. The W-9 hands you the payee’s taxpayer identification number so you can later file a Form 1099-NEC reporting what you paid.² For tax year 2026, the 1099-NEC filing threshold is $2,000 paid to a non-employee during the calendar year. That figure rose from $600 for payments made before January 1, 2026.³

A W-9 never substitutes for an I-9, and an I-9 never substitutes for a W-9. If you have the classification wrong, you have the form wrong.

Employee or Independent Contractor

The IRS looks at three categories when deciding whether a worker is an employee or an independent contractor: behavioral control, financial control, and the nature of the relationship.⁴

Behavioral control asks whether the business directs how the work gets done, not just what the finished product looks like. Detailed instructions, required hours, and mandatory procedures point toward employment. Financial control looks at who supplies the tools, whether expenses are reimbursed, and how payment is structured. A steady wage suggests employment; invoices for completed jobs suggest a contractor relationship. Relationship factors cover written contracts, employee-style benefits like insurance or paid time off, and whether the work performed is a core part of the business.

No single factor decides it. The IRS weighs all of them. When you genuinely cannot tell, either the business or the worker can file Form SS-8 to ask the IRS for a determination.⁵

Getting this wrong is expensive. If the IRS reclassifies a contractor as an employee, the employer owes back employment taxes at 1.5 percent of wages for income tax withholding plus 20 percent of the employee’s share of Social Security and Medicare. Those rates double to 3 percent and 40 percent if the employer also failed to file the required information returns.⁶ On top of that, the employer never completed an I-9 for someone who should have had one, opening a second penalty exposure.

Completing Form I-9

Form I-9 has two sections filled out by two different people. The employee completes Section 1 no later than their first day of work for pay, providing legal name, address, date of birth, and citizenship or immigration status. A Social Security number is voluntary unless the employer participates in E-Verify.⁷

The employer then completes Section 2 within three business days of the employee’s first day of work, after physically examining original documents the employee presents. The acceptable documents fall into three lists:⁸

List A documents establish both identity and work authorization. A U.S. passport or Permanent Resident Card is enough on its own.
List B documents establish identity only, such as a driver’s license or state ID.
List C documents establish work authorization only, such as a Social Security card or birth certificate.

An employee who does not present a List A document must present one from List B and one from List C. The employer must accept any valid combination the employee chooses and cannot demand specific documents.

Reverification

When work authorization has an expiration date, the employer must reverify before it lapses. USCIS recommends a reminder at least 90 days out. Reverification uses a List A or List C document showing continued authorization; you do not re-examine identity documents from List B.⁹ U.S. citizens, noncitizen nationals, and lawful permanent residents who presented a Permanent Resident Card the first time never need reverification.

Completing Form W-9

Form W-9 involves only the payee. The contractor downloads the current version from irs.gov and enters legal name (or business name), address, and federal tax classification. Classification options include individual or sole proprietor, C corporation, S corporation, partnership, trust or estate, and LLC with the appropriate tax treatment noted.²

The critical field is the taxpayer identification number, either a Social Security number or an Employer Identification Number. The payee signs under penalty of perjury certifying the TIN is correct and that they are not subject to backup withholding. Willfully providing false information carries fines up to $1,000 and up to one year in prison.¹⁰

Certain entities, such as corporations and tax-exempt organizations, qualify as exempt payees and enter an exempt payee code. Those codes apply only to entities, never to individuals.¹¹

Backup Withholding

If a contractor refuses to return a W-9 or supplies a TIN that does not match IRS records, the payer must withhold 24 percent of every payment and remit it to the IRS.¹² The contractor recovers that money only after filing a tax return. Collect the W-9 before the first check goes out.

Retention and Storage

Neither form gets filed with a federal agency at completion, but both must be retained and both contain sensitive information.

Completed I-9 forms stay with the employer for three years after the date of hire or one year after employment ends, whichever is later.¹³ They must be available for inspection by the Department of Homeland Security, the Department of Labor, or the Department of Justice. Keeping I-9s in a file separate from general personnel records makes an audit far less painful.

Completed W-9 forms stay with the requester, who uses the data to prepare 1099 filings. The IRS does not set a specific W-9 retention period, but you need the information for as long as the payee relationship lasts and through any open tax years. Both forms contain Social Security numbers, so store them in locked files or encrypted systems and destroy them securely once the retention period ends.

Penalties

I-9 Violations

I-9 penalties come in two tiers. Paperwork violations, like an incomplete form or missing the three-day deadline, run $288 to $2,861 per form. Knowingly hiring or continuing to employ someone without work authorization runs $716 to $5,724 per worker for a first offense, $5,724 to $14,308 for a second offense, and $8,586 to $28,619 for a third or subsequent offense.¹⁴ These amounts adjust annually for inflation, and a pattern or practice of violations can trigger criminal prosecution.

W-9 and Reporting Failures

The payer’s exposure with W-9s is failing to collect one and then filing incorrect or late information returns, or none at all. Skipping the W-9 does not eliminate the reporting obligation; it just leaves you without a TIN, forces backup withholding at 24 percent, and still leaves filing penalties on the table.¹² For the contractor, willfully certifying false information on a W-9 is a criminal matter with fines up to $1,000 and up to a year in prison.¹⁰

Deadlines at a Glance

I-9 Section 1: the employee completes it by their first day of work for pay.⁷
I-9 Section 2: the employer examines documents and completes it within three business days of the hire date.
W-9: no statutory deadline, but collect it before the first payment to avoid backup withholding.
1099-NEC: filed with the IRS and furnished to the payee by January 31 of the year following payment.¹⁵
I-9 reverification: completed by the earlier of the work authorization expiration date in Section 1 or the document expiration date in Section 2.⁹

1
U.S. Citizenship and Immigration Services. USCIS Policy Manual Volume 10 Part A Chapter 1 – Purpose and Background
2
Internal Revenue Service. Form W-9 – Request for Taxpayer Identification Number and Certification
3
Internal Revenue Service. Form 1099 NEC and Independent Contractors
4
Internal Revenue Service. Worker Classification 101: Employee or Independent Contractor
5
Internal Revenue Service. About Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding
6
Office of the Law Revision Counsel. 26 USC 3509 – Determination of Employers Liability for Certain Employment Taxes
7
U.S. Citizenship and Immigration Services. Completing Section 1, Employee Information and Attestation
8
U.S. Citizenship and Immigration Services. Handbook for Employers M-274 – 13.0 Acceptable Documents for Verifying Employment Authorization and Identity
9
U.S. Citizenship and Immigration Services. Completing Supplement B, Reverification and Rehires
10
Office of the Law Revision Counsel. 26 USC 7205 – Fraudulent Withholding Exemption Certificate or Failure to Supply Information
11
Internal Revenue Service. Request for Taxpayer Identification Number and Certification (Form W-9)
12
Internal Revenue Service. Publication 15 (2026), (Circular E), Employers Tax Guide
13
U.S. Citizenship and Immigration Services. Handbook for Employers M-274 10.0 Retaining Form I-9
14
Federal Register. Civil Monetary Penalty Adjustments for Inflation
15
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC