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, and a non-US person gives you a W-8BEN. If they are a company, it is a W-8BEN-E.

Two forms, one job each. A W-9 is the form a US person uses to give you their taxpayer number. That is the number the IRS files them under. A W-8BEN is the form a non-US person uses to tell you they are not American. So the rules written for Americans do not apply to them.

Collect them before you pay, never afterwards. For example, ask before the first payout, and the form is one more box when they join, so everybody fills it in. Ask after the first payout instead, and now you are asking a favour of someone who already has your money. Some of them never answer.

In AffiliateRail this is a single switch. Turn on required tax forms, and every partner then gets asked for a W-9 or W-8 in their own portal. Their payouts remain switched off until it arrives. The forms are stored and exported to you, and never filed anywhere, because you are the one making the payments. 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 They are out of date.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 that threshold does not mean. It does not make small payments tax free, and the IRS says so plainly on its 1099-K page. Whether or not a form arrives, the income must be reported. And the threshold belongs to one particular form. Which form you file depends on how the money reached them, and that is the next question.

Who is the payer of record?

In shortPayer of record means whoever's name is on the payment. If the money leaves your account and arrives in the affiliate's, that's you. If a platform holds your money and pays it out, the platform stands in the chain. Then the paperwork has a middleman in it.

That one label answers three questions at once. Whose name is on the payment. Whose paperwork this is. And who the affiliate emails when something goes wrong.

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

How you paid changes which form the payment shows up on. Pay through a network like PayPal, and the processor typically reports it for you on a Form 1099-K. Send it directly from your bank instead, and it leans towards your own 1099-NEC. Let's say the same affiliate is paid half by PayPal and half by bank transfer in one year. That is two separate questions wearing one name. This page will not tell you which form to file. Your accountant will. The export is built to make that quick.

What happens if an affiliate never sends the form?

In shortBackup withholding is money the payer holds back. It goes to the IRS instead of to the payee. The US rules set it at a flat 24% when a payee will not provide their taxpayer number. Whether that bites on your payments is a question for your adviser, so the clean fix is to never discover. 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, and expires on the last day of the third calendar year after that. The IRS gives its 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 happened decides whose income it is. Publication 515 says the place a service was performed is what counts, whatever the contract says and wherever the money came from. An affiliate promoting you from their own country performed the work there, and that matters. The US might count some of the money as earned inside the US. Then the same publication sets a 30% withholding rate on payments to foreign people, unless a tax treaty reduces it. Whether any of your payments count is the first question on the accountant list below.

Form 1042-S gets filed even when you withheld nothing. The instructions say so. You file it even if no tax was held back, and that covers a treaty or the law making the income exempt. So your adviser may say those rules apply to your payments. Then the form still exists whether or not any money was kept back.

What does a UK or EU founder do?

In shortOutside the US this becomes a VAT question rather than a forms question. A commission is a payment for a service. When one business buys a service from another, VAT is handled in the buyer's country. You are the buyer, so you account for the VAT yourself. That is called the reverse charge. And you write your affiliate's invoice for them.

The UK rule is in VAT Notice 741A. Paragraph 6.3 says a service sold business to business counts as supplied where the customer is. Paragraph 5.1 says you handle the VAT yourself when three things hold. The supplier is overseas, you are in the UK, and the service is not exempt. In practice, your affiliate in Portugal adds no Portuguese VAT. You put the UK VAT on your own return, and you claim the same amount back on the same return. For most VAT-registered businesses the two entries cancel each other out. They still have to be there.

The EU rule says the same thing in the VAT Directive. Article 44 covers the place of supply of services to a taxable person. It is the place where that person has established their business. Article 196 says VAT is payable by the person to whom those services are supplied. That applies 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".

So who writes the invoice? Strictly speaking, the affiliate does, because they are selling you a service. In practice, someone promoting you from their spare room has never written a compliant invoice, not once in their life. Self-billing means you write the invoice on their behalf and send it to them. That is the fix. VAT Notice 700/62 sets three conditions. A signed self-billing agreement with each supplier first, and every invoice marked as self-billed. And a check that they are VAT registered where that applies. AffiliateRail writes a self-billed invoice per payout on the Scale plan. Get your adviser to approve the agreement wording once, then you are finished. The agreement article puts this in writing as a clause.

Two edge cases. The UK VAT registration threshold is £90,000 of taxable turnover in twelve months. If you are under it, different rules apply again. And the EU One Stop Shop will not help you here. The Commission's own page describes it as the scheme for selling to consumers. A commission paid to a business is a different thing.

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, checked by the payment provider as they type it.
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, so 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, and because 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, because 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 payment method, one row per partner per method. No column guessing at which form applies, and that is deliberate. Your accountant sorts the rows in minutes, which beats rebuilding a year of payments in January.

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

Common questions