Form W-9 is an IRS created form used by an individual or an entity, like a company, to request the taxpayer identification number TIN and other information from parties they have paid.
An information return, like Form MISC , is used to communicate to the IRS reportable payments made to certain parties in the normal course of business. In this case, the company would ask the independent contractor to complete and return a Form W Please note Form W-9 should only be used if you are a U. This is helpful to the W-9 requester as certain types of payments made to specific entities do not need to be reported to the IRS on an information return.
In addition, the tax classification can be used along with the exempt payee code to determine that backup withholding is not required. Another purpose of Form W-9 is to help ensure that full payment is received for goods and services sold. If Form W-9 is not provided to the individual or entity that requests it, future payments can be subject to having part of the payment withheld known as backup withholding and remitted directly to the IRS. This is similar to the way federal tax is withheld from an employee paycheck.
In most cases, just remitting Form W-9 to the requester eliminates any requirement for backup withholding. If there are discrepancies the IRS may request further information from the taxpayer or initiate an audit.
An individual or entity Form W-9 requester who is required to file an information return with the IRS must obtain your correct taxpayer identification number TIN which may be your social security number SSN , individual taxpayer identification number ITIN , adoption taxpayer identification number ATIN , or employer identification number EIN , to report on an information return the amount paid to you, or other amount reportable on an information return. Examples of information returns include, but are not limited to, the following:.
The part that you have to fill out looks like this:. When someone wants you to send them a W-9, this is what they want from you: either a social security number SSN or an employer identification number EIN. 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.
Some accountants will even suggest collecting a W-9 before issuing any payments at all, to encourage people to file up-front. We're an online bookkeeping service powered by real humans. Bench gives you a dedicated bookkeeper supported by a team of knowledgeable small business experts. Your bookkeeping team imports bank statements, categorizes transactions, and prepares financial statements every month.
Get started with a free month of bookkeeping. This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. 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. Those who fill out Form W-9 must also certify that they are exempt from backup withholding. Because the W-9 also requires a Social Security number or tax ID, it should be guarded carefully to protect from identity theft.
They should also have concerns if they receive a W-9 form from a company for whom they are supposed to be working as a regular employee; the company may be trying to defraud them of benefits they are entitled to by counting them as an independent contractor.
If an LLC operates as an independent contractor for other companies, then it too must complete a W-9 form. To do so, the following special considerations should be taken for the form:.
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