Forms & Instructions Internal Revenue Service

If you maintain your account in the U.S., you can leave the second line blank or write “N/A.” If you’re unsure about your exemptions, Page 3 of the form outlines situations that would make you exempt. Only certain businesses or entities with any reason for exemption need to fill out these spaces. If this applies to you, you’ll need to provide a number or letter code that indicates that reason.

You may provide certification instructions on a substitute Form W-9 in a manner similar to the official form. Typically, individuals who receive a W-9 form do not need anything withheld from their payments. SmartAsset Advisors, LLC («SmartAsset»), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. A W-9 form is crucial to filing your taxes if you’re a contract worker, a freelancer or self-employed.

  1. If you’re unsure, it’s best to reach out to whoever requested the form W-9 from you.
  2. Making sure that Form W-9 is completed accurately can save a lot of trouble come tax time.
  3. It’s a way of formally gathering personal information, having a standard method of transmitting information, and requiring the furnisher to certify that the information they are providing is correct.
  4. The good news here is that filling out a W-9 is a fairly short form.

Under IRS law,[2] an employer making payments for wages is responsible for collecting withholdings from employees. If you’re an employee, your employer will withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on your wages. Instead of filling out a Form W-9, new hires are often asked to fill out a W-4 to provide their taxpayer information to their employer.

The contractor is responsible for reporting their income if they are not working with a business. Online freelance service marketplaces, such as Upwork or Fiverr, may require U.S. persons signed up on their platforms to fill out a Form W-9 if their yearly income exceeds $600. Like online marketplaces and eCommerce platforms, freelance service platforms can request the signing of a W-9 either as a sign-up condition or when the platform detects a member’s earnings exceeds the threshold. In 2021, Diana sold $984 worth of products by June, exceeding the $600 threshold for the first time since signing up. In response, the eCommerce platform temporarily withheld Diana’s payment, requesting she send a filled-out Form W-9 before receiving her earnings. We’ll handle your financial reporting for you, so when it comes time to file taxes, you have everything you need to make it a breeze.

These same reports can be used every day to optimize your business and maximize your cash flow. By bringing on the support of our bookkeeping teams, you can grow your business without worrying about how to report it to the IRS. Independent contractors fill out the W-9 to confirm their tax responsibilities and provide information to their employer(s). In turn, employers use a contractor’s W-9 to complete a 1099 detailing the worker’s income. If you are exempt from reporting required by the Foreign Account Tax Compliance Act (FACTA), you will fill in the second line. The latter only applies if you hold your accounts outside the United States.

Line 3 – Federal Tax Classification

Application for Employer Identification Number (EIN)
Use this form to apply for an employer identification number (EIN).

You’re generally only required to sign it if the IRS has notified you that you previously provided an incorrect TIN. Technicalities aside, however, the person who asked you to fill out Form W-9 will probably consider it incomplete or invalid if you haven’t signed it. Completing a Form W-9 is required whether you are subject to withholding or not. If you are exempt, this form is your means of communicating that exception to the paying party. The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct. In addition, the W-9 may be a company’s primary means of obtaining your personal information.

Requester of Form W-9 – Main Contents

Installment Agreement Request
Use this form to request a monthly installment plan if you cannot pay the full amount you owe shown on your tax return (or on a notice we sent you). US Individual Income Tax Return
Annual income tax return filed by citizens or residents of the United States. Individuals with a sole proprietorship status who have filed a Form SS-4 and received an Employer Identification Number have the option to enter their EIN instead of their SSN.

The address, city, state and ZIP code will go into Lines 5 and 6. When you begin working with a contractor or freelancer that you will be paying, you should request that the contractor complete a Form W-9 prior to starting any engagement. Failing to do so could prove troublesome after beginning the work. Request for Transcript of Tax Return
Use this form to order a transcript or other return information free of charge, or designate a third party to receive the information. Employers must file a Form W-2 for each employee from whom Income, social security, or Medicare tax was withheld.

Online Marketplace Platforms – Amazon, eBay, Etsy, etc.

In this optional step, you can provide the requester’s name and address. You might want to fill out this box to keep a record of to whom you provided your tax identification number. 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.

Making sure that Form W-9 is completed accurately can save a lot of trouble come tax time. Several types of individuals and businesses can fill out Form W-9. These are the options for which box you should check on line 3. Depending on your circumstance, select the most appropriate federal tax classification on line 3 for the name entered on line 1. The IRS considers a sole proprietor an individual who owns an unincorporated business without help, as long as the business isn’t an LLC run as a C-corporation. Avoiding making mistakes while filling out an IRS Form W-9 is crucial.

Likewise, banks, brokerage firms and other payers typically ask for a completed W-9 to prepare your 1099s to report items such as interest, dividends, cancellation of debt and more. The Department of the Treasury and the Internal Revenue Service issued final regulations amending the rules for filing returns and other documents electronically (e-file). These regulations affect filers of many types of returns including information returns (for example, Forms 1099) and withholding tax returns (for example, Forms 945 and 1042). Beginning with Tax Year 2020, you must use Form 1099-NEC, Nonemployee Compensation, to report payments of nonemployee compensation (NEC) previously reported in box 7 on Form 1099-MISC.

How Do I Know if I Am Subject to Backup Withholding?

If you can’t get a straight answer, talk to a tax professional. Remember that the only reason anyone would ever need a W-9 from you is because they need it to send you some kind of IRS form. To learn more about who is subject to backup withholding, check out this IRS page. If a contractor is subject to backup withholding, they’ll have to indicate that on their W-9. There are 18 different 1099 forms, each one relating to the nature of the income. This includes freelance or contract income, but also real estate sales earnings, debt cancellation, pension contributions and more.

Form W-9 will have your personal identifiable information and states whether you’re subject to backup withholding. Unless you are subject to backup withholding, this individual or business will not withhold taxes on your behalf. The Information Returns Intake System (IRIS) Taxpayer Portal is a system that provides a no cost online method for you to electronically file Forms 1099. This free electronic filing service is secure, accurate and requires no special software.

The form itself isn’t even an entire page long, excluding the instructions. The business that hires you should fill in its name and employer identification number (EIN). Do you have additional questions about IRS Form W-9 or need help filing your return? Our tax pros speak the tricky language of taxes and are committed to helping you better understand your return.

If you are an American citizen, freelance platforms require you to fill out a W-9 when signing up to report your income to the IRS. For more information on foreign payees, see the Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY. Advise foreign persons to use the appropriateForm W-8 or Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for more information and a list of the W-8 forms. If your small business is collecting W-9s, you should make sure to send them well before the 1099 deadline.

For individuals, the TIN is generally a social security number (SSN). FATCA requires a participating foreign financial institution to report all U.S. account holders that are specified U.S. persons. Form w-9 has an Exemptions box on the front of the form that includes entry for the Exempt payee code (if any) and Exemption from FATCA Reporting Code (if any). An IRS form W-9, or “Request for Taxpayer Identification Number and Certification,” is a document used to obtain the legal name and tax identification number (TIN) of an individual or business entity.

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