There are four common situations where you may need to fill out a W-9 form and send it to someone: The W-9 form is a very simple IRS form with exactly one function. You can send your Tax Identification Number (TIN) – which is your Employer Identification Number (EIN) or Social Security Number (SSN) – to another person, bank or financial institution. Form W-9 allows companies to keep track of their external employees. This means that you do not send your Form W-9 to the IRS. Instead, you send it to your supervisor or the company`s human resources department. If you have completed multiple tasks for multiple companies, you can complete a series of W-9 forms in the same year. You will also need to submit new W-9 forms if you change your name, business name, address or tax number. An independent contractor who receives an unexpected W-9 should hesitate before completing it and investigate whether the applicant has a legitimate reason to request this form. Financial institutions sometimes use Form W-9 to request information from a customer when they need to declare dividends or interest.
Be careful here: the financial institution should probably already have your tax number when opening the account. Your bank or financial institution you invest with may also need a completed W-9 from you to submit any of the other types of Form 1099 they use to report items such as interest income, distributions, and proceeds from real estate transactions (for example. B when you sell your home). If you are asked to complete a Form W-9, you may receive a tax form 1099 from the person or company paying you at some point in the future. This is similar to an employee`s Form W-2, but is much simpler because it only brings in your gross payments. Companies that hire independent contractors do not withhold income tax and do not pay Medicare or Social Security taxes on their independent contractors as they do for their employees. Instead, entrepreneurs are responsible for these obligations. However, the IRS still wants to know how much these entrepreneurs received to make sure they pay the taxes they owe, and it uses Form 1099-MISC to collect that information.
Companies do not submit Form W-9 to the IRS. There is also no guarantee that the recipient will store the form securely, even if you send it securely. You may want to inquire about this in advance. If an LLC is acting as an independent contractor for other businesses, it must also complete a Form W-9. To this end, the following special considerations should be taken into account for the form: W-9 forms are aimed at self-employed workers such as freelancers, independent contractors and consultants. You`ll need to use it if you`ve earned more than $600 this year without being hired as an employee. If your employer sends you a W-9 instead of a W-4, the company has probably classified you as an independent contractor. You must confirm with the company that this is the case. Knowing your status allows you to plan your tax return. The above article aims to provide generalized financial information aimed at educating a wide segment of the public. There is no personalized tax, investment, legal or other business and professional advice.
Before taking any action, you should always seek the help of a professional who is familiar with your particular situation for advice regarding taxes, investments, the law, or other business and professional matters that affect you and/or your business. As an independent contractor or freelancer, you will receive a W-9 form when you start your work with the company that uses your services. In January, you will then receive your MisC Form 1099, which documents your annual earnings. When you file your federal tax returns, attach each of the 1099 forms you received. The company will also file your 1099-MISC with the IRS. To compete with Form W-9, the following information must be provided: Forms W-9 are intended for independent contractors, also known as freelancers. It is important to fill out the form correctly – but only if you are sure that it is the right form to submit and that the request is legitimate. If someone other than a customer, bank or financial institution asks you for a W-9 form, you should think twice before sending one.
This type of information can lead to identity theft and should be protected as such. This declaration is necessary because companies are not required to pay taxes on social security or health insurance or to withhold income taxes on the salaries of independent entrepreneurs – these come from the taxes of independent contractors. Therefore, the IRS needs to know who is being paid and how much it knows who owes those taxes, and the W-9 provides the personal information needed to find out. If your small business collects W-9s, you should make sure to send them well in advance of the 1099 deadline. The deadline for Forms 1099-MISC and 1099-NEC is January 31, and most other Forms 1099 are due at about the same time. Signing and dating this section confirms that all the information you enter here is correct. The title of Form W-9 is officially Application for Taxpayer Identification number and certification. Employers use this form to obtain the Tax Identification Number (TIN) from contractors, freelancers and suppliers.
The form also contains other personal data such as your name and address. If you think the person requesting the form has nothing to do with requesting it, a rejection is probably a good idea. If you`re worried, ask a tax professional what you should do. Companies use irs Form W-9, Request for Taxpayer Identification Number and Certification to obtain information from suppliers they hire as independent contractors (also known as freelancers). If a business pays a contractor $600 or more in a taxation year, it must report those payments to the Internal Revenue Service (IRS) using an information return called Form 1099-MISC. Businesses use the name, address, and Social Security number or tax identification number that entrepreneurs provide on Form W-9 to complete this information return. Neither the sender nor the recipient should send a copy to the IRS. Forms 1099 and W-9 go hand in hand. Independent contractors complete the W-9 to confirm their tax responsibilities and provide information to their employers. In turn, employers use a contractor`s W-9 to fill out a 1099 that details the employee`s income. Employers should also not ask you for a W-9. The appropriate shape for them is the W-4 form.
If you start a full-time job and your employer gives you a W-9 instead of a W-4, it could mean that they hired you as an independent contractor rather than as an employee, and you could be required to pay taxes to the IRS. Freelancers and contractors must complete Form W-9 for each client they have worked for. To stay on the safe side, save a copy of Form W-9 for your own records. You can use it to contact a customer if you miss the 1099 MISC tax period. Use Form W-9 to share your correct Tax Identification Number (TIN) with the person who needs to file an information return with the IRS to report it, for example: To be sure, some businesses send Form W-9 to each of their contractors to fill it out in advance, even if they don`t expect to do $600 of work for them. Some accountants will even suggest collecting a W-9 before even making payments to encourage people to submit in advance. .