Tax & Compliance made uncomplicated

A W8 form is issued by the United States’ Internal Revenue Service (IRS). It is completed by non-US residents and non-US corporations who have received a source of US-based income. The form certifies an individual’s overseas status. By completing a W8 form, a payee avoids or reduces the tax withholding applied to their US based income.

A W9 form gathers identifying information, such as the name, address, and Taxpayer Identification Number, for payments made by US businesses to US residents. A W9 form is completed by a payee. A completed W9 can help a payee to avoid backup withholding taxes. Without a completed W9, a payer may be forced to collect withholding taxes.

A 1042 form is filed to the IRS to report the tax withheld on certain US-based incomes of foreign nationals.

A 1042-S form is also issued by and submitted to the IRS. If you pay a US source of income to foreign payees, you must submit a completed 1042 and 1042-S form for every overseas payee you have paid. Each 1042-S form details the amount of US income you have paid to a particular foreign national. Typical payments reported on a 1042-S include royalties, dividends, real estate income, pension income, scholarships, gambling winnings, interest, grants, prize money, and insurance premiums.

A 1099-MISC or 1099-NEC form is used to record specific payment types totalling more than $600 made to a US resident in any given tax year. Salaries, wages, and tips are not subject to a 1099 form. Instead, a 1099 form covers income from areas such as interest, dividends, rental property income, sales proceeds, and payment to independent contractors. If you pay a US resident more than $600 in a financial year, and they are not part of your payroll, then it is likely you will need to complete a 1099 form to record this information for the IRS.

A 1099-K form is similar to a 1099 form. It is to record specific payment types totalling more than $600 made to a US resident in any given tax year. The key difference between 1099-K, 1099 and 1099MISC is that 1099K is designed to cover payment card transactions or a third-party network transaction:

“Payment card transaction” means any transaction in which a payment card—or any account number or other identifying data associated with a payment card—is accepted as payment.

“Third-party network transaction” means any transaction settled through a third-party payment network—but only after the total exceeds the above thresholds.

Our tax services solution is one of the most comprehensive on the market. By including 1042 forms, we have provided a significant advantage to US-based businesses that are regularly paying digital royalties to non-US-based creators. Our solution removes the burden, time, and cost of manual form filling. It also provides accurate withholding calculations for every payee. And it enables you to help your payees to be compliant with IRS regulations throughout the financial year.

Your payees will receive emails prompting them to complete the relevant form for their needs. Each of those emails is automated and can be branded with your company logo and colors.

Yes. You can see which payees have completed, started, or not yet started their submission process.

Yes. All completed W-, 1042 and 1099 forms are stored securely, so you will always be able to respond quickly in the event of an IRS audit.

We can explain how to technically fill out a W- form using our tax services solution, but we cannot advise on the specifics of what information to enter (this would fall under ‘tax advice’). Instead, you should seek advice from a certified tax professional or the IRS.

A tax wizard questionnaire offers guidance for payees to choose and complete relevant forms. However, we do not and cannot offer specific advice about what information to include in any form. Please seek professional advice where necessary.

When you sign up with Payoneer’s tax services solution, you provide the contact details of your payees. From there:

1. Your payee receives an email asking them to complete the relevant W- form.

2. Their submitted information is collected by Payoneer, stored securely, and then passed on to a third party that makes a precise withholding calculation for each payee.

3. All withholding payments per payee are then aggregated and automatically fed into a 1042 or 1099 form, which you can review before submitting it to the IRS.

Our 24/7 support teams are always on hand to help. If you have made a mistake on your tax form, please contact us for assistance.