IRS Form W-9 Form for Independent Contractors to Fill Out

If filing on behalf of a business, enter the business’s mailing address. Part I of Form W-9 requires the applicant to enter the Taxpayer Identification Number (TIN) in the appropriate field. Depending on the type of person or entity the form is for, the TIN may either be a Social Security Number (SSN) or a company’s Employer Identification Number (EIN). Commonwealth or possession, and their political subdivisions, agencies, and instrumentalities are exempt from taxes on form W-9s.

Your certification states that you are a U.S. citizen, other U.S. person or resident alien. If you are preparing your W-9 as a joint account, only the person whose TIN shows in Part I should sign. This will be the address where the person or business will mail you your 1099.

  1. The information obtained on a W-9 form is most often used to create a version of Form 1099.
  2. «The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding.»
  3. Enter your business name or «disregarded entity» name, if different from the name you entered for step 1.
  4. Companies hiring individuals with any self-employed status (e.g., gig worker, independent contractor) may request a W-9 form from them.
  5. If you’re a contractor and you receive a Form W-9 from an individual or business who is not a client, don’t fill it out.

If you’re unsure about if you need to complete or fill out Form W-9, check out the IRS’s Form W-9 Instructions. We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors. Planning out your taxes is just one aspect of your financial plan. Another option is to send it through a service such as FedEx, UPS, or the postal service, though there is no guarantee your form will not be lost, stolen, or tampered with in transit. Amy Fontinelle has more than 15 years of experience covering personal finance, corporate finance and investing.

Typically, you provide your SSN if you file as an individual or single-member LLC. Use your EIN if you file as a multi-member LLC classified as a corporation or partnership. If you are a sole proprietor, you could use either number, but your SSN is preferable. The purpose of a Form W-9 extends beyond just this single situation. A bank or financial institution relies on the receipt of taxpayer information in order to properly report Form 1099-INT, 1099-DIV, or 1099-B.

A financial institution may also require you to report interest, dividends and capital gains earned by their customers. A taxpayer can also be subject to civil penalties for providing incorrect information that leads to incorrect withholding. If the taxpayer makes a false statement that results in no backup withholding, they’re subject to a penalty of up to $500. Penalties get worse upon further non-compliance, as the taxpayer can be subject to criminal penalties in certain cases.

Estate Executors

You will check the first box if you are filing as an individual, sole proprietor or single-member limited liability company (LLC) owned by an individual and disregarded for U.S. federal tax purposes. A sole proprietor business operates under the owner’s Social Security number and hasn’t been registered as another type of business. Employers use the completed W-4 to determine how much to withhold from your paycheck for federal income taxes.

Penalties for Non-Compliant Form W-9

If you receive a penalty notice, you also may have to send a solicitation to the payee. 1586, Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/TINs. If any one of the joint payees who has not established foreign status gives you a TIN, use that number for purposes of backup withholding and information reporting. If the payee is not exempt, you are required to backup withhold on reportable payments if the payee does not provide a TIN in the manner required or does not sign the certification, if required. Backup withhold on any reportable payments if the payee makes a withdrawal from the account after the close of 7 business days after you receive the awaiting-TIN certificate. Treat as reportable payments all cash withdrawals in an amount up to the reportable payments made from the day after you receive the awaiting-TIN certificate to the day of withdrawal.

Forms and Associated Taxes for Independent Contractors

This may be especially helpful to any small business that currently sends their 1099 forms on paper to the IRS. Through the Taxpayer Portal, you can submit automatic extensions, make corrections and reduce expenses related to paper filing. The Taxpayer Portal allows you to enter data to create Forms 1099 by either keying in the information or uploading a .csv file. For more information see Publication 5717, IRS Portal User GuidePDF.

This act is designed to protect the economy after the stock market crash of 1929. Real estate investment trusts are exempt from w-9s because they instead use a Form 8612. Futures commission merchants registered with the Commodity Futures Trading Commission are exempt from W-9s. Corporations are exempt from W-9s, but Limited Liability Companies (LLCs) are not.

Some platforms require signing the form as a condition for signing up, while others may withhold payment until the seller sends a filled-out W-9 back to the platform. To avoid possible fines, you must send the contractor the first annual solicitation by December 31st of the year you started doing business together. If they fail to provide a W-9 again, you will send a second annual solicitation and provide a W-9 the following year by December 31st.

These entities are exempt for the same reason as U.S. agencies; taxes pay for them, so taxing them does not make sense. Musicians and bands are considered independent contractors and must fill out Form W-9s when they make more than $600 from a gig. According to the Internal Revenue Code Section 61, all income is taxable unless exempted by another tax regulation. IRC Section 104 provides more information regarding lawsuit settlements and what constitutes taxable income. If lawsuit settlement income does not enter one of these exceptions, it is taxable, and you may be required to fill out a W-9.

Another purpose of Form W-9 is to help the payee avoid backup withholding. The payer must collect withholding taxes on certain reportable payments for the IRS. A W-9 form is a formal written request for information only and is used solely for the purpose of confirming a person’s taxpayer identification number (TIN). For most individuals, the TIN will be their Social Security Number (SSN). The Foreign Account Tax Compliance Act (FACTA) appears on the second prompt of the Exemptions line.

If that independent contractor receives more than $600 in a calendar year, they are required to be sent a Form 1099-MISC and self-report their own taxes. Further, individuals or businesses can become subject to backup withholding for failing to report interest, dividend or patronage dividend income. If you receive a Form W-9 with a FATCA exemption code and you know or have reason to know the person is a specified U.S. person, you may not rely on the Form W-9 to treat the person as exempt from FATCA reporting. However, you may still rely on an otherwise completed Form W-9 to treat a person as a specified U.S. person. An exemption from FATCA reporting (or lack thereof) does not affect backup withholding as described earlier in these instructions.

A contractor who refuses to fill out a W-9 could be subject to a $50 fine for each instance. You should always provide a W-9 when starting a business relationship. If a contractor refuses to provide a W-9, you must begin backup withholding. All payees listed in items 1 through 4 and 6 through 11 are exempt. A person registered under the Investment Advisers Act of 1940 who regularly acts as a broker also is exempt.

The IRS considers freelance musicians independent contractors, so they must fill out a W-9 any time they receive money in exchange for their services. A W-9 is a form filled out by independent contractors to provide tax information to the business employing them as long as they are paid $600 or more. The IRS will send you a notice if the payee’s name and TIN on the information return you filed do not match the IRS’s records. (See Taxpayer Identification Number (TIN) Matching, next.) If you receive a backup withholding notice, you may have to send a «B» notice to the payee to solicit another TIN. 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), contains copies of the two types of «B» notices.

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