Regularly reviewing and updating W-9 records ensures businesses have the most current information, aligning with IRS requirements for accurate reporting. You’ll need to have Form W-9 completed by a freelancer or independent contractor before they begin working for your company. And as important as it is to an employer that a worker fill out the W-9 accurately, it’s just as important to the contractor.
Responsibility of a Withholding Agent/Qualified Intermediary (QI)/Nominee
For example, if you’re a sole proprietor who rents office space, but you file your tax return using your home address, enter your home address on form W-9 so the IRS won’t have trouble matching your 1099s with your Form 1040. Avalara 1099 & W-9 is a powerful tax automation solution that makes it easier to collect, manage, and e-file IRS forms — 1099s, W-2s, W-4s, and more. Address information should be complete—both lines should include the payee’s street address, city, state, and ZIP code. If the payee meets all the non-employee requirements, this address may also be used to distribute an applicable 1099 form. The completed form W-9 should be sent to the requestor who needs it for tax reporting purposes.
You can file and distribute forms electronically or mail paper forms. Many payroll services, such as Gusto and Justworks generate, file and distribute W-2 forms automatically. If you are a contractor and businesses engage you for new work often, you can keep an unsigned, scanned W-9 on your computer or in the cloud. Then all you need to do is print, sign, and scan one each time you need it. If the contractor has an EIN, they do not need to also supply their social security number.
- Form W-9 has space to enter an Exempt payee code (if any) and Exemption from FATCA Reporting Code (if any).
- If you’re not sure what type of business entity you should select, the IRS has provided a summary table for guidance as part of the Form W-9’s instructions.
- From there, you’ll be able to print the blank and fillable W-9 form to complete manually.
- Signing and dating this section certifies that all of the information you’re entering here is correct.
- Some days, it may seem like the number of employee payroll forms that need to be completed is never-ending.
W9 form: Definition and how to fill it out.
Using external experts can also be a cost-effective way to get high-quality results without making a long-term commitment to a new employee. For instance, many businesses work with top-tier freelance copywriters and creatives on a project-by-project basis, because hiring them full-time could put a strain on the budget. Furthermore, some companies rely on assistance from independent contractors, such as accountants or occasional part-time help, to shore up schedules during their busy seasons.
You might find it easiest to have professionals submit the form to you when they sign a contractor agreement before they begin working on a project. If a person is filling out the form for a partnership, limited liability company (LLC), or another type of corporation, the individual should put the name of the legal entity on line 2. For example, a partnership or single-member LLC would put its “doing business as” name here. If any one of the joint payees who hasn’t established foreign status gives you a TIN, use that number for purposes of backup withholding and information reporting. However, the following payments made to a corporation and reportable on Form 1099-MISC, Miscellaneous Information, are not exempt from backup withholding.
More In Forms and Instructions
The process of “backup withholding” is one of the unfortunate consequences that can result from information submitted to the IRS that does not match IRS records. The IRS requires that businesses impose and remit a 24% backup withholding tax on all future payments made to a contractor until the IRS receives the correct information. Businesses are required to take care of tax withholding for employees and pay Social Security and Medicare taxes on their wages. Contractors have the responsibility of paying their own state and federal income tax and consequently may make business deductions, such as the costs of keeping a home office.
If they’re a business, then an Employer Identification Number (EIN) applies. It might be the case that individuals filling out a W-9 don’t yet have a Tax Identification Number (TIN). Depending on their citizenship or entity status, they can apply for a TIN and write “applied for” in Part I of the W-9. They will be subject to backup withholding until they receive their TIN and submit an updated W-9 to the payer. Contractors must fill out a W-9 form accurately to ensure compliance. Although the form comes from the IRS and is used to collect taxpayer information, individuals don’t submit the form to the IRS.
Who Is Required to Fill Out a W-9 IRS Form?
For more information on these exemptions and the codes used for them, see pages 3 and 4 of Form W-9. If you are exempt from backup withholding, you can enter a code in Line 4 that explains your exemption. As a small business owner, it is important to collect a W-9 w-9 for any person or entity you expect to pay more than $600 in a tax year. You will use the information provided to you on the W-9 to complete Form 1099-NEC, Nonemployee Compensation, or Form 1099-MISC, Miscellaneous Income. Yes, a W-9 is most often used for individuals who are self-employed. If a worker is an independent contractor, freelancer, or self-employed, Form W-9 must be provided to those whom you have earned over $600 from without having been hired as an official employee.
The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. You must have payees complete a W-9 before beginning to pay them, so you can use the taxpayer ID on the first, and all, payments. The IRS calls the business that needs the form the “requester” because they must request that the payee (the business or person being paid) complete the form. Learn how to accurately complete a W-9 form, understand its purpose, and avoid common errors for efficient tax reporting.
Names and TINs To Use for Information Reporting
Bella Avila is a content management specialist on the investing and taxes team at NerdWallet. Previously, she was a copy editing intern at NerdWallet through the Dow Jones News Fund internship program. Bella graduated from The University of Oklahoma with a bachelor’s degree in journalism. Pamela de la Fuente leads NerdWallet’s consumer credit and debt team. Her team covers credit scores, credit reports, identity protection and ways to avoid, manage and eliminate debt.
In addition, you have the option to list relevant account numbers at the end of this top section of the Form W-9. This account number section may be used to uniquely identify someone based on a number within the client’s system. If you are supplier #45 in their records, they may ask you to make note of your supplier number on this line. Sign and date the form to certify that all the information is correct. If you get lost, the form itself has general instructions at the bottom.
- We’ll go into each section of the IRS form in further detail below to help you get this paperwork out of the way as fast and easily as possible.
- This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research.
- Part I is where individuals filling out the W-9 enter their TIN.
Generally, a presumption of foreign status is required if a properly completed and signed Form W-9 is not received. A payee may rebut any presumption by providing reliable documentation to the withholding agent or, if applicable, to the IRS. We clarified that a Limited Liability Company (LLC) that is a disregarded entity should fill out line 3a by checking the appropriate box for the tax classification of its owner in the first row on line 3a. We also added guidance that provides clarity for disregarded entities completing lines 1 and 2. For proper processing, information for disregarded entities is reported as the owner’s name on line 1, and the disregarded entity’s name is entered on line 2. Some types of accounts and transactions don’t require a signature on the certification or they may be modified.
Familiarize yourself with the W-9 before it’s time to submit your return. The W-9 tax form is a single-page document entitled “Request for Taxpayer Information and Certification.” The W-9 requirements are basic, disclosing a contractor’s identifying tax information. This includes the legal name, address, and social security number of individuals who don’t have a registered business entity.