What is Form I-9? Documents, penalties, and best practices in 2025

Staying compliant with the ever-changing regulatory landscape is a top priority for small business owners, especially as they grow. And with 44% of businesses planning to expand their teams in 2025, according to the QuickBooks Entrepreneurship in 2025 report, it's more important now than ever before to understand the ins and outs of the I-9 form. 

By law, employers must keep the I-9 document for all employees, including temporary or seasonal hires. Noncompliance could result in fines of up to $27,894, so staying up-to-date is crucial.

This 2025 guide provides a comprehensive overview of I-9 requirements, best practices, and what to avoid.

What is an I-9 form used for?

The Employment Eligibility Verification form, also known as Form I-9, is a form that the US government requires for each employee. Form I-9 and its supporting documentation aim to prove two things: an employee’s identity and authorization to work in the US.

The I-9 includes two sections—one for the employee and one for the employer. Each new employee must complete and sign the first section by the end of their first day. Employers must complete and sign the second section by each new employee’s third day of work. 

There’s also an optional form called Supplement B that employers must complete in special scenarios like rehires, name changes, or other re-verification cases. 

Who needs Form I-9?

If you have any employees, you need to complete and keep I-9s for each of them. Even if you are your only employee, you will still need to complete an I-9. You do not need to complete I-9s when hiring independent contractors. 

You may not have the information or documentation you need to complete an I-9 for a new employee. But you should avoid reclassifying that employee to an independent contractor to avoid I-9 requirements. There are stiff penalties for doing so—the government could ban you from doing business in the US.

Who is exempt from Form I-9?

While nearly all employees require an I-9, there’s still some limited exceptions. These exemptions typically apply to specific employment situations or relationships.

• Independent contractors: As mentioned previously, independent contractors are not considered employees and thus do not require I-9 forms.
• Employees hired before November 6, 1986: You don't have to complete an I-9 form for employees you have continuously employed before this date.
• Casual domestic workers: Individuals performing sporadic or irregular work in a private home, such as babysitting or gardening, may be exempt. However, it's important to note that this exemption is often nuanced and depends on the specifics of the employment arrangement.
• Certain religious workers: Ministers and other individuals performing religious duties may be exempt under certain circumstances.

How to fill out an I-9 form step by step

Form I-9 is straightforward and includes two sections. Employees fill out Section 1, and employers fill out Section 2. In unique circumstances, employers also use the Supplement B form.

Section 1: Employee section

Section 1 is for employee information and attestation. In Section 1, employees provide basic information about their identity, including their:

• Name
• Address
• Date of Birth
• Social Security Number
• Email address (optional)
• Telephone number (optional)
• Citizenship status

Citizenship status often causes the most confusion in Section 1 of the I-9. The form asks employees to check one of four citizenship options. They must attest, under penalty of perjury, that they are: 

1. A citizen of the United States: This includes those born in the US, including Puerto Rico, Guam, and the Virgin Islands, or those legally naturalized into the country.   

2. A noncitizen national of the United States: Employees born in American Samoa, some former citizens of the Trust Territory of the Pacific Islands, and some children of noncitizen nationals born abroad are in this category. 

3. A lawful permanent resident: This includes noncitizens who permanently and legally live in the United States. Lawful permanent residents usually have visas that document their status. When filling out the I-9, these employees must include their seven- to nine-digit Alien Registration Number or USCIS Number.

4. An alien authorized to work: Asylees, refugees, those with a Temporary Protected Status, and other unique circumstances fall under this category. Those who select this option must indicate in the space provided when their employment authorization expires. If the employee’s employment authorization documentation does not include an expiration date, the employee should enter “N/A” in the space.

Aliens authorized to work should include one of three document numbers to support their selection: Their Alien Registration Number/USCIS Number, Form I-94 Admission Number, or Foreign Passport Number, including the country of issuance.

Once the employee completes Section 1, they can sign and date the I-9. Make sure new hires complete this section during employee onboarding by the end of their first day of work. 

The I-9 is available in English and Spanish. If needed, a translator, family member, or friend can help them prepare Section 1. In this case, also fill out Supplement A, which declares the use of a translator or preparer. 

Section 2: Employer review

Section 2 is for employer review and verification. Employers must complete Section 2 by the third business day after an employee begins work. Section 2 includes three subsections: 

• Subsection 1, Identification: In the first subsection, employers copy the employee’s name and citizenship or immigration status from Section 1.

• Subsection 2, Proof of Identity: Employers review employee documents that provide proof of identity and authorization to work. For a list of acceptable documents, check the IRS website. Remember that employers cannot accept photocopies of documents. Only the original copies comply with Section 2 rules.

• Subsection 3, Certification of Work Eligibility: An authorized representative of your business must provide their name, title, signature, and business contact information. The representative must also examine the provided documents and verify that they’re “genuine and relate to the employee named.” Finally, the representative must confirm that the employee is authorized to work in the US to their knowledge.

The certification subsection can be a little daunting. But you don’t have to be an immigration law expert or attorney to comply with this section. If you make a good-faith effort to complete this section and honestly review the documents provided, you meet the certification requirements.

Supplement B (formerly Section 3): Reverification and rehires

Supplement B (formerly known as Section 3) is for re-verification and rehires. You are not required to fill out this section for most new hires. You may complete Section 3 under the following circumstances:

• When an employee’s employment authorization expires.
• When you rehire a terminated employee whose original employment authorization documents have expired.
• When an employee’s name changes.

When reviewing Supplement B documents, you should evaluate them with the same good-faith standard you used to review Section 2.

I-9 document requirements

When filling out the I-9 form, make sure to pay close attention to the required documents. Employees must provide acceptable documents to prove both their identity and their authorization to work in the United States. These documents are categorized into three categories: Lists A, B, and C.

List A: Documents that establish both identity and employment authorization:

• US Passport 
• Permanent Resident Card or Alien Registration Receipt Card (Form I-551)
• Employment Authorization Document (Form I-766) that contains a photograph
• Foreign passport that contains a temporary I-551 stamp or temporary I-551 printed notation on a machine-readable immigrant visa
• For citizens of the Federated States of Micronesia (FSM), the Republic of the Marshall Islands (RMI), or Palau, a foreign passport with an I-94 or I-94A Arrival-Departure Record with an endorsement from the Department of Homeland Security (DHS) indicating admission under the Compact of Free Association between the United States and the FSM, the RMI, or Palau

List B: Documents that establish identity:

• Driver's license or other State-issued identification card (must contain a photograph)
• ID card issued by federal, state, or local government agencies or entities (must contain a photograph)
• School ID card with a photograph
• Voter's registration card
• US military card or draft record
• Military dependent's ID card
• US Coast Guard Merchant Mariner Card
• Native American tribal document
• Canadian driver's license

List C: Documents that establish employment authorization:

• Social Security card (unless it is laminated or restricted)
• Birth Certificate (US Department of State, county, or municipal)
• Certification of Report of Birth (Form DS-1350)
• Consular Report of Birth Abroad (Form FS-240)
• US Citizen Identification Card (Form I-197)
• Identification Card for Use of Resident Citizen in the United States (Form I-179)
• Employment authorization document issued by the Department of Homeland Security (DHS) (Form I-94 with employment authorization stamp)

Employers should carefully review the employee's chosen documents to ensure they meet the requirements.

What penalties can businesses face for I-9 violations in 2025?

Unfortunately, the US Immigration and Customs Enforcement (ICE) has broad authority to issue penalties for big and small I-9 violations. These penalties can be either criminal or civil and typically fall into two categories: 

• Knowing violations: A knowing violation means the employer expressly understands that it employs individuals who are unauthorized to work in the United States. Penalties for recruiting, referral, and rehiring unauthorized noncitizens range from $698 to $5,579 for first offenses for each knowingly employed unauthorized worker. The penalties range from $5,579 to $27,894 for second and subsequent offenses.
• Technical violations: Technical violations are for filling out I-9 forms incorrectly. Technical violations can range from $281 to $2,789 for the first offense for substantive violations or uncorrected technical errors.

ICE issues much harsher penalties for knowing violations, but technical violations add up if ICE finds consistent errors in your I-9 process. Whether it’s a knowing or technical violation, penalties stack on each other. The fines can multiply if your company grows and you have uncorrected I-9 errors.

Common Form I-9 mistakes and how to prevent them

Accurately completing I-9 forms is essential to avoid penalties and maintain compliance. However, even with the best intentions, common mistakes can occur. 

Help your business stay on the right side of the law by understanding these common errors and preventative measures: 

• Missing signatures: Both the employee and employer must sign the I-9 form. A thorough review before filing any I-9 can ensure all required signatures are present.
• Incorrect citizenship/immigration status: Employees may select the wrong option or misunderstand the categories. Providing clear instructions and examples during onboarding and allowing employees to ask clarifying questions can help avoid this.
• Accepting expired documents: Employers must verify that the documents presented are valid and unexpired. Training staff to recognize valid documents and their expiration dates is crucial. Using tickler systems or software to track document expiration can also be beneficial.
• Incorrect document numbers: Employees might accidentally switch numbers around or enter incorrect information. To minimize errors, it's helpful to have employees review and double-check their entries before submitting the forms.
• Failure to update I-9s: When an employee's work authorization expires, employers must reverify their eligibility. Make sure to implement a system to track work authorization expiration dates and automatically trigger reverification procedures. 
• Improper storage of I-9s: I-9s must be stored securely, separate from employee personnel files. Establishing clear guidelines for I-9 storage, including physical and electronic security measures, is vital.

Understanding these common pitfalls and implementing the suggested preventative measures will help businesses significantly reduce the risk of I-9 errors and ensure compliance with federal regulations. 

Hiring the right people for your small business

So then, what is an I-9? Simply put, it’s a document employers must have employees complete in order to verify their authorization to work in the United States. Complying with this US Law puts employers in a better position to hire confidently and grow their business the right way. 

Remember to invest in reliable accounting software that integrates with your payroll to help the hiring process go even smoother.