🧾 1099-NEC Without SSN/ITIN
📊 Contractor Compliance Decision Tree (For Your Tax Office)
🔹 STEP 1 — Did the business pay the worker $600 or more?
- ❌ NO → No 1099-NEC required
- ✅ YES → Go to Step 2
🔹 STEP 2 — Is the worker a U.S. Person or Foreign Person?
Ask the worker to complete one of the following BEFORE PAYMENT:
| Worker Type | Form to Request |
|---|---|
| 🇺🇸 U.S. Citizen / Resident | Form W-9 |
| 🌎 Foreign Individual | Form W-8BEN |
🇺🇸 IF THEY COMPLETE A W-9
➡️ TIN Provided?
- ✅ YES →
✔ Pay normally
✔ Issue Form 1099-NEC - ❌ NO →
🚨 Backup Withholding Required You must:- Withhold 24% from future payments
- Send withholding to IRS
- File Form 945
- Still issue Form 1099-NEC
🌎 IF THEY COMPLETE A W-8BEN (Foreign Worker)
🚨 DO NOT issue a 1099-NEC
Instead:
✔ Withhold 30% (unless treaty applies)
✔ File:
- Form 1042
- Form 1042-S
❌ IF THEY REFUSE TO COMPLETE W-9
You must:
✔ Document request for W-9
✔ Begin 24% Backup Withholding
✔ Remit to IRS
✔ File:
- Form 1099-NEC
- Form 945
Keep proof of:
- Text
- Signed refusal
- Written request
This protects your client from Missing TIN penalties.
🛑 NEVER DO THIS:
🚫 Pay contractor
🚫 No W-9
🚫 No withholding
🚫 Still file 1099-NEC
➡️ This creates payer liability for the tax that should’ve been withheld.
🧠 Best Practice Policy for Your Clients
“No W-9 = No Payment”
This eliminates:
1042-S misfiling issues
Backup withholding headaches
1099 penalties
IRS notices
