When a business hires an independent contractor and pays them a total of $600 or more annually, the IRS requires the business to submit Form 1099. In order to collect the contractor’s information to turn in the 1099 form, the business must request the contractor fill out Form W-9.
Here’s what you need to know about the W-9 form, one of the most common tax forms.
What Is a W-9 Form?
Independent contractors provide their personal information, including their taxpayer identification, on a Form W-9 — the Request for Taxpayer Identification Number and Certification — so that the hiring agent can report to the IRS all of the money that they paid to freelance employees over the course of the calendar year.
The hiring agent will also use the details on the W-9 form to complete Form 1099, which is then used by the independent contractor to fill out their income tax return.
Who Needs To Complete a W-9 Form?
Any non-employee who is receiving pay and classified as a U.S. citizen or resident alien will need to fill out a W-9 form. Freelancers and independent contractors are the most common classifications.
Classes can also include individuals receiving income from the following:
- Interest on a mortgage
- Dividends from stocks or other investment income
- Income from prize winnings
- Real estate proceeds
- Canceled debt
You may also need to fill out a W-9 for an estate or domestic trust.
How To Fill Out a W-9 Form
To complete a W-9 form correctly, you’ll need to provide the following information:
- Your name — or the name of your business
- Your federal tax classification — sole proprietor, corporation, partnership, etc.
- Exemptions, if any
- Your physical address
- Taxpayer Identification Number — either your Social Security number or your employer identification number
- Your signature and date after reading and agreeing to everything written in the “Certification” section
The IRS issues penalties for false or incorrect information on W-9 forms, so contractors must ensure all information supplied is accurately reported.
Where Can I Get a W-9 Form?
You can get a W-9 from the following sources:
- Your employer: The individual or business who has initiated the contract in return for services rendered might provide Form W-9 at the onset of the contract.
- Tax preparation services: Accountants and tax preparation service employees carry all of the important federal income tax forms. Simply stop by the office and request one.
- The IRS website: Visit IRS.gov and print out a blank W-9 form to fill out. Turn the form in to the hiring agent or company, not the IRS.
Individuals who fill out a W-9, unlike those who have to fill out Form W-4, will not have any taxes deducted from their pay. Instead, freelancers who expect to owe taxes of $1,000 or more when their returns are filed will need to estimate taxes quarterly and remit them to the IRS using Form 1040-ES.
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Joel Anderson contributed to the reporting for this article.