As a sole proprietor or independent contractor, you complete a variety of tax forms traditional employees avoid, and these include IRS W9 Form. This one is simple, but it’s still important to know its purpose. Most of all, you have to learn how to complete it correctly and keep your information secure.
IRS W9 Form | Learn Its Purpose and How To Fill It Out
In This Article:
What Is IRS W9 Form?
The IRS W9 Form is for independent contractors (freelancers), consultants, sole proprietors, and other self-employed professionals. Its official name is Request for Taxpayer Identification Number and Certification.
This form serves no other purpose than to provide information to businesses about the consultants they hire. Companies may have to request for one if it pays contractors at least $600 within the tax year. The data is then helpful in completing 1099-MISC. It is a form to report miscellaneous or non-employee income.
It does not make the business responsible for paying regular wages or other benefits such as Social Security to the contractors. The IRS simply wants to know how much the freelancer is earning and if the self-employed is reporting the correct income.
Where Can You Find Form W9?
If a business or another financial institution requests you complete IRS W9 Form, it is more likely they want to give the form to you. If you need to issue Form W9 to other independent contractors, you can download the form here.
How Do You Complete Form W9?
The IRS W9 Form is easy to complete. You will only need to enter a few pieces of information and read through a few pages of instructions.
The form has two parts. The first one is the Taxpayer Identification Number (TIN). The second part is the certification. It is acknowledging the information you provided is true and updated. You then sign the form in this area.
The form begins with a request for your full name, as indicated on your latest income tax return. If you have since changed your name (for example, through marriage or divorce), you can submit your first name and the name featured on your Social Security card, followed by your new last name. If the name of your business differs from your personal name, add the entity title in line 2.
Classification and Withholding Tax Information
Once you have identified both your name and the name of your business, check just one of the provided seven boxes that indicate your federal tax classification. Options include:
- identification
- partnership
- scorporation
- ccorporation
- trustestate
- limited
- other
If you check the box for LLC, you will need to indicate a tax classification of C for C corporation, S for S corporation, or P for partnership.
Most people who complete IRS W9 Form will not indicate any exemptions in line 4. Sole proprietors often lack exemption from backup withholding. Otherwise, exemptions highlighted in Form W9 may include an exempt payee code or a reporting code for exemption from the Foreign Account Tax Compliance Act (FATCA). Unsure about exemptions? Consult with the institution issuing the form.
The Line 5 of IRS W9 Form is reserved for address information. The form’s requester will email subsequent data you share in Line 5. Indicate whether the address is new. Keep in mind the payor may continue to use the old address until records are up-to-date.
What Is the Taxpayer Identification Number?
The Taxpayer Identification Number (TIN) is a core component of IRS W9 form. This identifying number is usually for tax purposes. It could be assigned by either the Social Security Administration or the Internal Revenue Service (IRS).
As a sole proprietor, you may have both a Social Security Number (SSN) and an Employer Identification Number (EIN). You can use either for IRS W9 Form. If you do not have a TIN, you’ll need to apply for either your SSN or EIN using Forms SS-5, W-7, or SS-4.
Certification
The final step to IRS W9 Form completion: certification. In this portion of the form, you certify you have included the correct taxpayer information and that you are either a United States citizen or “person” as defined by the form. Cross out item II in the certification section if the IRS has already offered notification of being subject to backup withholding. Otherwise, sign where indicated and be sure to include today’s date.
Red Flags to Watch For with Form W9
Because IRS W9 Form is so simple, most taxpayers are able to complete and submit it without issue. Occasionally, however, problems can arise.
Tax and Social Security fraud are a real risk. Fraudsters could use the information from Form W9 to access sensitive data.
If an unknown business requests you complete IRS W9 Form, check to ensure you are actually associated with it in some way. The business should be reputable and offer detailed information as to how it will use the completed form.
When in doubt, ask the requesting organization which tax documents you will receive upon completing the form. Do not complete a W9 document if you anticipate a W4 instead. It may indicate a misunderstanding regarding your employee classification.
In general, do not submit IRS W9 Form until you feel fully confident you will benefit from its completion. Always seek additional information whenever necessary.
If you choose to submit Form W9, select the most secure option possible.
For example, do not send it as an email attachment if you have not secured it. Ideally, deliver the form by hand or by mail. If you must submit online, use an encrypted file attachment.
Are you a freelancer? Understand taxation better from this video by Kurt Von:
Filling out the self-employed forms including IRS W9 Form is easy. By supplying a few key pieces of information, you can ensure correct accounting and taxation practices. Complete this form carefully and securely, and you will see no trouble from the IRS, your banking institution, or your contracting company.
Have you filled out an IRS W9 Form before? How’s the experience? Share your stories below.
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