What Is a W-9 Tax Form?

At the end of the tax year, the business you did work for will use the information on your W-9 to complete a 1099-MISC. A financial institution may also require you to report interest, dividends and capital gains earned by their customers. If you are starting a new job and your new employer hands you a W-9 to fill out, ask if your new job is as a self-employed contractor or as an employee. Employees fill out the Form W-4 to set their tax withholding level. A client, financial institution, or another payer will most likely ask you to fill in a Form W-9.

The entity’s main mailing address must be provided in lines 5 and 6. The client’s address may also be added in the space on the right of the mailing address section, but is not required. Usually, the party requesting a W-9 Tax Form will provide a blank one for you to fill out. This post is to be used for informational purposes only and does not constitute legal, business, or tax advice.

Line 2 – Business Name

If this applies to you, you’ll need to provide a number or letter code that indicates that reason. Most of the time, a company or financial institution will send you a blank W-9 form to complete before you begin business with them. If you need to issue the form, you can download a W-9 from the IRS website.

These systems may also allow you to run reports and identify missing information. Tackling this list monthly or quarterly makes this task simpler and less overwhelming than reviewing it annually. Similar programs and apps can be used to file your information returns at year-end, but only if your W-9 information has the correct taxpayer identification number and other pertinent details. Further, individuals or businesses can become subject to backup withholding for failing to report interest, dividend or patronage dividend income. The Limited liability company box is for a Partnership or LLC businesses with multiple members. If your LLC has not filed a request to be taxed as a C or S corporation, it is taxed as a Partnership.

What is the Difference Between W-9 vs W-8 Forms

Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein. If your small business is collecting W-9s, you should make sure to send them well before the 1099 deadline.

The information is used to fill out Form 1099 and is used for independent contractors, freelancers, or unrelated vendors; not employees. The entity paying the taxpayer (the person or business rendering the services) receives the W-9 form from the taxpayer. When reporting the payments made to the taxpayer at the end of the year, the organization uses the data on the W-9 form to create and issue Form 1099-MISC or other applicable tax forms. The form acts as an agreement that you, as a contractor or freelancer, are responsible for withholding taxes from your income.

Do I have to pay taxes if I fill out a W-9?

To ensure the information returned is accurate, the purpose of a W-9 is to gather all required information directly from the vendor. Form 1099 is also used to furnish mortgage interest payments, student loan payments, real estate transaction proceeds, and discharge of certain types of debt. For these forms, the opposing party may request Form W-9 to ensure they have appropriate information on file. A W-9 form is crucial to filing your taxes if you’re a contract worker, a freelancer or self-employed. The companies you work with do not have to withhold paycheck taxes for you, and the W-9 serves as an agreement that you are responsible for paying those taxes on your own. Independent contractors fill out the W-9 to confirm their tax responsibilities and provide information to their employer(s).

For example, if an employer has five contractors and doesn’t give them 1099-NECs, the employer could pay fees of up to $2,850. According to the law, you are not obliged to fill out and sign a Form W-9 if an individual https://www.bookstime.com/ or company who mailed it to you doesn’t have a legal reason to ask you for it. If you receive a W-9 from an unexpected source, the best decision would be to ask them, if possible, why they want you to fill out a W-9.

pdfFiller Tax Forms Catalog

When you’re a full-time employee, your employer withholds some of your income to cover federal income taxes and FICA taxes (which include Medicare and Social Security taxes). You’re required to fill out every W-9 form requested by an individual or business you’re providing professional services for. If an employer or business partner requests a W-9 from you and you don’t submit one, you may be subject to backup withholding. In this case, the employer has a right to withhold 28 percent of the money you’ve earned and forward this information to the IRS.

Many of these forms tell the IRS (Internal Revenue Service) when and if other forms need to be filled out, the type of payments that need to be applied, taxes that you should be withholding and more. Backup withholding is money sent to the IRS from income payments which otherwise wouldn’t be subject to withholding. Payers may be required to withhold taxes to ensure that the IRS will receive income taxes that are owed to them. The W-4 is used by the employer to determine how much federal income tax should be withheld from the employee’s paycheck and reported to the IRS. As opposed to needing this from an external party, a company seeks out a W-4 from its own internal team.

When should I send W-9?

The Foreign Account Tax Compliance Act (FACTA) appears on the second prompt of the Exemptions line. Foreign financial institutions are generally required to report payments to, and withhold taxes from payments to their customers that are United States persons. However, certain payees are exempt from this and will need to enter the applicable code from the Form W-9 instructions to assert their exemption.

• Here’s a guide on how Square Payroll tax filings and payments work to make life simpler for business owners and managers from coast to coast.
• Whether you’re hiring US citizens or foreign contractors, correctly filling out each form and cooperating with the IRS is non-negotiable for businesses.
• These platforms also may streamline the corresponding payments, and their compliance tools will keep you heeding regulations year-round.
• After that, save the form, print it, send for signing, or email it to your agent right from your browser.
• If a contractor is subject to backup withholding, they’ll have to indicate that on their W-9.

This information is optional and should usually be left blank. If the business is a single-member LLC, check the ‘Individual/Sole Proprietor’ box rather than the ‘LLC’ box. A company or individual may also request a W-9 from you for real estate transactions, mortgage interest payments, acquisition or abandonment https://www.bookstime.com/articles/what-is-a-w9 of secured property, cancellation of debt, or your IRA contributions. If your business has any employees or operates as a corporation or partnership, it probably needs an EIN to do business and file with the IRS properly. If you need one, check out the IRS’s online application form for the EIN.