What is Form W-9? – A comprehensive Guide

Most of you are probably familiar with many tax forms, which vary from 1040 to the W-2. Not everyone is familiar with the W9 though. Learn all you need to know about the W9 here with the help of our guide. When you’re a contractor or self-employed, the income taxes are different with different forms and processes. You all must be familiar that you need to report your earnings to the Internal Revenue Service (IRS). Also, the companies you work for or provide services to will have to report your earnings to the IRS. That’s where the W-9 form comes in the picture.

What Exactly is a Form W-9?

  • In the case of full-time employees, the employer withholds some income in order to cover Medicare, Social Security, and other necessary taxes. However, in the case of vendors or independent contractors, employers need to fill out a W-9.
  • A W-9 is one which provides personal identification information about a contractor, like a name, address and a Taxpayer Identification Number. This form helps to serve as an agreement that you, who is a vendor is responsible for paying your own income tax. You are also expected to contribute to Medicare and Social Security on your own.
  • The business you worked for will use the information on your W-9 and complete a 1099-MISC IRS form. This outlines the payments made to you.

Who has to Fill Out a Form W-9?

Remember, it’s not just contractors who may need to fill up a W-9 tax form. Any income earned on real estate transactions, as well as mortgage interest paid by an individual need to be listed on an IRS W-9 tax form.

Here’s a short list of common candidates for a Form W-9:

  1. Professional consultants

Consultants handle business advisory services for clients. Consultants may advise on specific company interest, marketing, sales, finance, and they fulfill their tax obligations via W-9 forms.

  1. Freelancers

Freelancers take on a short-term project for clients. Freelancers commonly provide W-9 forms to clients to fulfill tax obligations.

  1. Trade workers

Professional trade workers, like a landscaper, plumber, or electricians rely on W-9 forms for their taxes.

  1. Certain corporations and LLCs

Some corporate contractors — specifically limited liability company (LLC) contractors need a W-9 form when they file as an individual entity and not as a corporation.

How to Submit an IRS W-9 Tax Form?

Anyone who needs to file a Form W-9 will receive that form from their client before they undertake any services.

Here’s a list of steps:

  • List your full name at the top of the form. Ensure it matches the exact spelling on any tax forms which you submit to the IRS.
  • List your business name next.
  • Write your tax classification which will help categorize your tax status. You can list yourself as a sole proprietor, single-member LLC, or as an individual etc.
  • See that you include your residential data. W-9 filers should include their address, street name, and number as well as an apartment number if needed.
  • Include your TIN/social security number. Usually, all that’s required on this line is your Social Security number.
  • Follow it up with signing your name. When you complete your W-9 form, sign your name and add the date.

Important Tips for Form W-9

There are several steps to improve your W-9 filing experience:

  • Always keep your W-9 form private. Ensure you don’t leave it in a public place or transmit it in an unsecured way. You need to make securing your W-9 form a top priority.
  • Keep your form up-to-date. Remember to update your W9 form in the event of a change of address, name change etc.
  • Be accurate in the information you provide. If you submit a form with falsified information, you leave yourself open to prosecution, heavy penalties or even imprisonment.
  • If you have any questions about your W-9 form, contact a seasoned tax accountant who can help you file it with accuracy.