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W9 Form

What is IRS Form W-9?

The IRS (Internal Revenue Service) W-9 form is one of the common tax documents used in the United States income tax system. It is used by businesses to verify information, namely your taxpayer identification number, from various kinds of companies or individuals that they hire. It is very commonly used for individuals working as independent contractors for a company or for freelancers.

Individuals or businesses request the W-9 form to report income paid to independent contractors, freelancers, vendors, or others who are generally self-employed. The person or business you complete work for uses the W-9 form to collect information or specific details about you, including your name, address, and taxpayer identification number. The Social Security number is typically asked for from individuals, while employer identification numbers are needed for businesses).

Once filled out, the W-9 form can then be used for federal tax purposes, such as to determine whether tax withholdings are necessary on payments you receive, to submit other forms, such as the 1099 and 1098 forms, or to report real estate transactions with the internal revenue service.

You may need to fill out several forms if you are providing professional services to multiple companies or businesses when requested. It's also important to check your status with the employer and verify that you are classified as a freelancer rather than an employee.

Typically, employers who request the W-9 form from you already classify your position as an independent contractor. It is important that they do not classify you as a full-time employee, as you would not have to fill in the form if that were the case.

If someone pays you, he or she must request the W-9 Form from you; however, the requester has no obligation to file it with the Internal Revenue Service. The requester keeps the completed form on file and can use it, for instance, to prepare other returns or determine whether to file it for tax refunds.

Visit the IRS website for more detailed instructions if you are unsure what's required for your business when filling the W-9 form.

The purpose of Form W-9

The W9 form is one of a number of tax documents the internal revenue service requires an contractors to submit to calculate their taxes owed each year. You will request information about the contractors you pay, but you will not withhold income taxes from their pay - a self employed person is responsible for collecting and paying their own taxes.

In the U.S., an employer must provide a W-9 form to each self-employed worker, meaning independent contractors, LLC contractors, vendors, freelancers and consultants. It is necessary for the contractor to make sure that the W-9 form is filled out and submitted before sending it back to the employer, who will keep it for several years.

The form The W-9 is a form that confirms that a newly hired contractor is responsible for paying his or her own taxes.

Rather than being sent to the IRS, the form is sent to your employer or the human resources department of the company you are doing contract work for. This employer can then uses the data from the W-9 on the Form 1099, another kind of tax document. In addition, the IRS can use the W-9 to determine independent contractors' taxable income.

Approximately half of the information on this form pertains to self-employed individuals, such as their name, business name (if applicable), address, employer identification number and the date they completed the form. With your signature on the form, you confirm that all identifying information on the form is accurate and that backup withholding does not apply to you.

The W-9 is typically updated annually. Occasionally, employers may also request a form review unannounced. You may be required to update your W-9 if any of your contact information (for example, your name, business name, address) changes.

When to request a W-9 form

Using the W9 form is essential when dealing with contractors, like freelance workers. The W9 form is required if your company is subject to non-employee compensation or pays small businesses over $600 each for completed work.

Income paid to independent contractors do not have to have taxes withheld or subject to Social Security or Medicare taxes. For this reason, the IRS needs to know who you are paying so they can collect. At the end of each tax year, to ensure correct information is disclosed, use the W-9s to document how much you paid each contractor.

Information required on a W-9 form

The W-9 is a very short document, less than a page long. A 7-line document is divided into 2 parts and followed by a date and signature field. If you are filling out a W-9 form, here are some things you need to know:

• The Name field appears at the top of the W-9 form. Ensure the spelling is the same as it is on other tax forms that you have filed. This is the same name that appears on your tax return.
• The field for "Business Name". This section of the W-9 must only be completed by business owners whose business name differs from that listed on Line 1 of the form (trade name, DBA, entity name).
• You will need to indicate your tax status here according to IRS classifications. You will need to check the appropriate box below depending on whether the form is filled out by an individual, a corporation, a limited liability company (LLC), partnership, or an estate.
• Partnerships may have special rules, as they are generally required to pay a withholding tax on any foreign partners' share of income from the business.
• In this section, if your entity is exempt from backup withholding, enter your code for line one. If your entity is exempt from the Foreign Account Tax Compliance Act (FATCA), enter your code for line two. Individuals don't need to complete this section.
• You should enter your address (street and apartment number) in order to receive notifications and information from your employer.
• Provide your ZIP code, city, and state.
• If you don't have any account numbers, leave this section blank. If your employer needs additional account numbers, list them here.

You must fill out the following section of the W-9 form to complete the reporting of your earnings by your employer. This part of the form must be completed as follows:

Part 1: There are two choices in this section. If you fill out the W-9 form as an individual or single-member LLC, you should provide your Social Security Number. If you fill out the form as a corporation or partnership, you should provide your Employment Identification Number. Individuals who don't qualify for an SSN can use their taxpayer identification number instead. If you're a sole proprietor, you can provide both numbers.

In Part II, you will find certification, a crucial part of your W-9 that ensures you have entered the correct data. Make sure you have verified all the information is correct before signing your document and adding the current date.

W-9 form field information.

• Name of the payee or their business name

Paying someone who operates as a business entity

• The payee’s federal tax classification

How the business entity plans to report this income. Individual/sole proprietorship/single-member LLC, C corporation, S corporation, partnership, trust, and limited liability companies (LLCs) will check the appropriate box.

• The payee’s full current mailing address.
• The payee’s taxpayer identification number (TIN)

Generally, this is the social security number of US citizens operating as individuals or sole proprietors. The TIN is the employer identification number for other entities and businesses. Individual taxpayer identification numbers (ITIN) for a resident alien is required as well.

• An exempt payee code

Less commonly used to inform the requester of exempt payees. (from withholding taxes)

Why having the correct employer identification number and other personal information is important.

The W-9 form does not expire, but it is important to ensure that the information is up to date, and that you provide the correct taxpayer identification number. Every time you change your personal or business details (Social Security Number), you must resubmit your W-9 to your employer or client.

For example, if you move, your address will be different, so the employer will not be able to reach you. You can be penalized for failing to correctly report information to the IRS if you are paid for work you are doing.

Other common IRS (Internal Revenue Service) tax forms

1099 Tax Form

To report the total amount of non-employee compensation paid to a contractor, businesses must use the MISC, which refers to miscellaneous income earned by freelancers or self-employed individuals.

W4 Form

All new regularly employed employees should sign this form, so that you can determine how much to withhold from their wages.

W2 Form

This shows what was paid to your employees that year and how much was withheld from their salary. It ensures that your employees receive any income tax refunds owed to them.

1040 Form

Individual taxpayers use this form to determine whether additional taxes are due or if a refund will be given on their income tax return.

1098 Form

Used if you received mortgage interest of $600 or more from individuals in the tax year.

941 Form

To report what was withheld from employee paychecks and also contribute the employer's share of Social Security or Medicare taxes for them.

1065 Form

A business partnership's profit, loss, deductions, and credits are declared on this tax document. Additionally, partnerships must also submit Schedule K-1, which is prepared for each partner.

W8 Form

This document certifies that you do not reside in the United States