Businesses use Form W-9, Request for Taxpayer Identification Number and Certificationto gather information about independent contractors and other vendors. The independent contractor or vendor must fill out the W-9 and submit it to the business that pays them.
Why am I being asked to complete a Form W-9?
If you do consulting or gig work for a business without being on its payroll, you will likely be asked to complete a W-9.
When a business pays more than $600 to a single taxpayer during the year, it must submit an informational return to the Internal Revenue (IRS) to disclose the payments. This form is called Form 1099-NEC. The business needs pertinent information from you to report the payments accurately, such as your name, address, Social Security number (SSN) or Employer Identification Number (EIN), and your federal tax classification.
When do I need to request a Form W-9?
As a small business owner, it is important to collect a 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.
Going forward, Form 1099-NEC will be used to report nonemployee compensation for independent contractors or freelancers. In prior years, this information was reported on Form 1099-MISC. The current Form 1099-MISC is used to report other miscellaneous payments such as:
- Rents and royalties
- Prizes
- Medical and health care payments
- Crop insurance proceeds
- Fishing boat proceeds
What information is on Form W-9?
The first line is your name as shown on your tax return. If you are an individual and report your income from the contract work on Schedule C, Profit or Loss from Business, this line is straightforward. If you are a sole proprietor or single-member limited liability company (LLC), you should enter your own name on Line 1 as well. Partnerships, multiple-member LLCs, C corporations, and S corporations should enter the entity's name as shown on the entity's tax return.
The second line is for your business's name, if any. If you are a sole proprietor or single-member LLC, you should enter your business name or “doing business as" name (dba name) on Line 2. A partnership, multiple-member LLC, C corporation, or S corporation should enter any business name, trade name, or dba on Line 2.
The third box is where you need to check the federal tax classification of the person or entity listed in Line 1. Only select one option here. If you check the LLC option, you will also need to explain the tax classification you have chosen for your LLC. The options are:
- Individual/sole proprietor or single-member LLC
- C corporation
- S corporation
- Partnership
- Trust/estate
- LLC
If you are exempt from backup withholding, you can enter a code in Line 4 that explains your exemption.
Line 5 is for your address. Enter your number, street, and apartment or suite number. Line 6 is your city, state, and ZIP code. This is where your 1099-NEC or 1099-MISC will be mailed. You will need to add this information to your tax return when you file your taxes.
What is the difference between a W-9 and a W-4?
Independent contractors fill out a Form W-9. However, if you are an employee of a business, you should fill out Form W-4, Employee's Withholding Certificate, instead. Businesses withhold federal and state income taxes, Social Security taxes, and Medicare taxes for their employees and pay the taxes on their behalf.
As an independent contractor, you are responsible for tracking your income and paying estimated taxes on a quarterly basis. If you are an employee, you will receive a Form W-2wage and tax statementfrom your employer at tax time. If you are an independent contractor, you will receive Form 1099-NEC from the business that pays you.
Find out more about Business Accounting
FAQs
The W-9 is an official form furnished by the IRS for employers or other entities to verify the name, address, and tax identification number of an individual receiving income. The information taken from a W-9 form is often used to generate a 1099 tax form, which is required for income tax filing purposes.
What is W9 needed for? ›
Form W-9 (or an acceptable substitute) is used by persons required to file information returns with the IRS to get the payee's (or other person's) correct name and TIN. For individuals, the TIN is generally a social security number (SSN).
What happens if I don't fill out a W9? ›
Failing to do so could prove troublesome after beginning the work. Therefore, before starting any work with a person or business, be sure to ask for a Form W-9 if they haven't already provided you with one. Failing to do so could make you required to pay withholding taxes on the money that you pay them.
Why would someone ask me to fill out a W9? ›
A W-9 form is a form your client or the business you work for as a contractor should request from you as you start working together. The form provides the necessary information to the hiring party so they know if they need to later report your payments to the IRS via the 1099 form.
Do you need a W9 for every job? ›
Employee status: If you classify as an employee for a company and not an independent contractor or freelancer, you do not need to fill out a W-9 form. Earnings: If you earn less than $600 while you're working for someone as an independent contractor, you do not need to fill out a W-9 form.
Is submitting a W9 mandatory? ›
The short answer is: always. We'll review the exceptions to this rule, but overall, businesses should always request their vendors to fill out a W9 form.
Who should ask for a W9? ›
A Form W-9 must be completed by one party and furnished to a second party if the second party is going to furnish specific types of payments in the future. Most broadly, Form W-9 must be filled out by independent contractors that perform work for another party with which they are not employed.
Who is exempt from W9? ›
All payees listed in items 1 through 4 and 6 through 11 are exempt. Also, C corporations are exempt. A person registered under the Investment Advisers Act of 1940 who regularly acts as a broker also is exempt. Barter exchange transactions and patronage dividends.
Do I have to report a w9 for income? ›
A W-9 form isn't submitted to the IRS but provides information businesses use to complete a 1099-NEC form of a person's annual earnings.
Is a W9 the same as a 1099? ›
The main differences between W-9 and 1099 tax forms are that a W-9 is filled out by the supplier or independent contractor to provide their tax and payment information to the payer, whereas 1099 forms are provided by the payer to document the supplier or contractor's gross earnings after business has been done, which ...
Under a W-9, the company will not withhold any taxes for you. You are responsible for ensuring the right amount of taxes is paid to the IRS. And when it comes to Social Security and Medicare taxes, you must pay both the employer's and employee's share.
What is the purpose of requesting a W9? ›
Use Form W-9 to provide your correct Taxpayer Identification Number (TIN) to the person who is required to file an information return with the IRS to report, for example: Income paid to you. Real estate transactions.
Is a W9 for the employee or employer? ›
A W-9 is for independent contractors and freelancers only. Employees don't fill out a W-9 form. Earnings are less than $600: Independent contractors report income only once their earnings are more than $600 in a tax year.
Is it illegal to not fill out a W9? ›
The form requires a taxpayer to provide their name, address, tax classification, and withholding requirements. The form must be signed, and the signing taxpayer is subject to civil and/or criminal penalties for willful noncompliance.
How much money requires a W9? ›
Form W-9 is an IRS document that businesses use to collect a person's tax identification number (TIN). Independent contractors who were paid at least $600 during the year need to fill out a W-9. Workers with W-9 status don't usually have income taxes withheld from their payments.
How long is a W9 good for? ›
After they are completed, your vendors', freelancers' and contractors' W-9 forms do not expire. However, the IRS requires them to be replaced when specific information is changed, including changes in names, type of business entity or a taxpayer ID number.
Who benefits from W9 form? ›
What Is a W-9 Used For? A self-employed individual or independent contractor sends a completed W-9 form to the business to which they provide services, and the business uses that information to generate a Form 1099. The 1099 is the form that independent contractors will then use to report their income to the IRS.
How much do you have to make on a W9 to pay taxes? ›
Do I Have to Pay Taxes if I Fill Out a W-9? If you receive more than 600 dollars from that company in a calendar year, then yes. However, simply filling out a W-9 doesn't require a person to pay taxes.
