W-9, W-8BEN and the $2,000 rule: the tax forms a SaaS needs from its affiliates in 2026

By Jimi Barkway · Published 4 September 2026 · Part of the blog

Do you need a W-9 or a W-8BEN from your affiliates?

In shortIf your business is in the US, yes, from every affiliate, before the first payout. A US person gives you a W-9. A non-US person gives you a W-8BEN, or a W-8BEN-E if they are a company.

Two forms. One job each. A W-9 is how a US person hands you their taxpayer number. A W-8BEN is how a non-US person tells you they are not a US person, so the US rules written for US people, backup withholding among them, do not reach them.

Collect before you pay. Before the first payout the form is a box in onboarding and everyone fills it in. After the first payout it is a favour you are asking of someone who already has the money. Some never reply.

In AffiliateRail this is a switch. Turn on required tax forms and each partner sees the W-9 or W-8 flow in their portal. Their payouts stay off until the form is in. The forms are stored, exported, and never filed, because the payments are yours. The payouts guide has the detail.

What is the 1099 threshold in 2026?

In shortFor payments made in 2026, the reporting threshold for Form 1099-NEC is $2,000 in a calendar year. It was $600 for decades. From 2027 it moves with inflation, so check it every January.

The change came from Public Law 119-21, signed in July 2025. The IRS puts it in one sentence:

Most articles you will find still say $600. They are out of date. The 1099-NEC instructions carry the new figure and say it may be adjusted for inflation from 2027. The law itself is on govinfo if you want the source of the source.

Two things a threshold does not mean. Income below it is still taxable to the person you paid. The IRS says it plainly on its 1099-K page: whether or not a form arrives, the income must be reported. And the threshold belongs to a form. Which form you file depends on how the money moved, and that is the next question.

Who is the payer of record?

In shortWhoever's name is on the payment. If the money leaves your account and lands in the affiliate's, you are. If a platform holds your money and pays it out, the platform stands in the chain, and the paperwork has a middleman in it.

This decides more than it looks. Payer of record answers three questions at once: whose name is on the payment, whose forms are these, and who does the affiliate chase when it goes wrong.

Software that never touches the money keeps the answer simple. Keep it that way. AffiliateRail works out who is owed what and tells your own PayPal or Wise account to pay. The payment is yours, from you. The forms are yours to collect and yours to file. The custody page sets out the two models side by side.

How you paid also changes which form the payment lands on. A payment sent over a third-party network, and PayPal is one, is generally reported by the processor on Form 1099-K. A direct bank payment leans towards your own 1099-NEC. The same affiliate, paid half by PayPal and half by bank transfer in the same year, is two different reporting questions inside one person. So this page will not tell you which form to file. Your accountant will. The export is built for that.

What happens if an affiliate never sends the form?

In shortThe US rules provide for backup withholding at a flat 24% when a payee does not give you their taxpayer number. Whether that bites on your payments is a question for your adviser. The clean fix is to never find out: no form, no payout.

Three more rules that decide a sentence in your process.

A W-8BEN expires. It runs from the day it is signed to the last day of the third calendar year after that. The IRS's own example in the W-8BEN instructions: a form signed on 30 September 2015 was valid through 31 December 2018. Diarise the expiry. A form you filed away forever is a form that quietly stopped working.

Where the work was done decides the source. Publication 515 says the place where a service is performed decides the source of the income, whatever the contract says and wherever the payment came from. A non-US affiliate promoting from their own country is doing the work outside the US. The same publication carries the 30% chapter 3 rate for US-source payments to foreign persons where no treaty lowers it. Whether any of your payments are US-source is the first question on the accountant list below.

Form 1042-S is filed even when nothing was withheld. The instructions say so: a withholding agent files it even if no tax was withheld because a treaty or the Code made the income exempt. If your adviser says your payments are in chapter 3 scope, the form exists whether or not money was held back.

What does a UK or EU founder do?

In shortOutside the US the paperwork is a VAT question, not a form question. A commission is a payment for a service. Between businesses a service is taxed where the customer belongs. Here, that is you. So the reverse charge applies, and you write the invoice yourself under a self-billing agreement.

The UK rule is in VAT Notice 741A. Paragraph 6.3: the B2B general rule is that the supply is made where the customer belongs. Paragraph 5.1: the reverse charge applies where the place of supply is the UK, the supplier belongs outside the UK, you belong in the UK, and the supply is not exempt. Your affiliate in Portugal does not add Portuguese VAT. You account for the UK VAT on your own return, and reclaim it in the same breath. For most VAT-registered businesses the two entries cancel. The entries still have to exist.

The EU rule says the same thing in the VAT Directive. Article 44: the place of supply of services to a taxable person is the place where that person has established their business. Article 196: VAT is payable by the person to whom those services are supplied, if the supplier is not established in that Member State. Article 226 adds the wording the invoice must carry: where the customer is liable for the VAT, the mention "Reverse charge".

Who writes the invoice? Formally the affiliate, as the supplier. In practice a hobbyist affiliate in another country has never issued a compliant invoice in their life. So the practical answer is self-billing. VAT Notice 700/62 sets the conditions: a formal self-billing agreement with each supplier first, the invoice marked as self-billed, and a check that the supplier is VAT registered where that applies. AffiliateRail generates self-billed invoices per payout on the Scale plan. Have your adviser bless the agreement wording once.

Two edges. Below the UK registration threshold, £90,000 of taxable turnover in twelve months, different rules apply again. And the EU One Stop Shop does not help here: the Commission's own page describes it as the scheme for business-to-consumer supplies. A commission paid to a business is not one.

Which form, from whom?

In shortThe table below is the whole page in one grid. Read your row, then read the accountant list.

What do you collect before the first payout?

In shortFour things: the form, the payout details, the agreement to your terms, and a line in your own calendar for the day the form expires.

1. The form. W-9 or W-8BEN if you are in the US; the self-billing agreement if you are not. In the portal, as a step that blocks the payout.
2. The payout details. A PayPal email or a bank account, with the rail's own checks applied as they type.
3. The accepted terms. Which version, and when. The self-billing clause lives here.
4. The expiry. A W-8BEN runs to the end of the third calendar year. Put the date somewhere that will remind you.

If you already have affiliates and no forms, send this. Today. It works because it is short, it names the day the payout waits on, and it says where the form goes, which is nowhere but your own files.

When do you phone an accountant?

In shortBefore the first payout run, not at filing season. Bring these five questions. Each one is a decision this page cannot make for you.

1. Can a non-US affiliate promoting to a worldwide audience have US-source income, and does any of it come from US servers or US visits?
2. If the business is outside the US and pays non-US affiliates, does US backup withholding apply to any payment at all?
3. Does the self-billing agreement wording meet Notice 700/62, and which suppliers must be VAT registered for it to hold?
4. An EU sole-trader affiliate under their local threshold: does Article 196 still put the VAT on you?
5. Moving from a platform that held the money to paying direct: does that change any registration, in a US state or an EU member state?

Bring the export with you. AffiliateRail's annual export lists who you paid, how much, and by which rail, one row per partner per method, with no form column. That is the whole point of it. Your accountant classifies each row in minutes instead of rebuilding a year of payments in January.

This page is general information about how the rules are commonly understood. It is not tax or legal advice. Every figure on it is linked to the IRS, HMRC or EUR-Lex page it came from, with the day it was checked, in the list at the end.

Common questions