How to Complete W-9 Form for Independent Contractors and Freelancers

What is a W-9 Form?

The IRS Form W-9, or  “Request for Taxpayer Identification Number and Certification,” is used by U.S. taxpayers to provide their correct Taxpayer Identification Number (TIN) to the person or entity requesting it. TIN is typically a Social Security Number (SSN) or Employer Identification Number (EIN).  The requester could be an employer, financial institution, or any business required to report payments to the IRS. 

Form W-9 helps businesses prepare informational returns, such as Form 1099, to report how much was paid to an individual or company over the year.

When Do You Need to Fill Out a W-9? 

You’ll need to fill out Form W-9 when a business or financial institution requires your taxpayer identification information to process payments and report to the IRS. Here are some common situations where filling out a W-9 is necessary:

• If you provide services to a company as an independent contractor or freelancer and make over $600, the client will likely require you for a W-9 to issue a Form 1099, which reports your income to the IRS.
• Property owners renting to tenants may be asked to submit a W-9 so that rental payments can be reported.
• If you open an interest-bearing account or make certain types of investments, your bank or financial institution may require a W-9 to report any earnings to the IRS.
• If you’re involved in a real estate transaction, such as selling a property, you may be asked to submit a W-9 to ensure that any financial gains are properly reported.

How to Complete W-9 Form

Filling out the W-9 is straightforward, but getting it right is essential. Follow these seven simple steps to complete your W-9 form accurately. 

1. Download the Form from IRS.gov: The first step is to obtain the official W-9 form, which you can easily download from the IRS website. In most cases, the client or payor may provide the form directly to you.
2. Enter Your Name (Line 1): Write your full name exactly as it appears on your tax return. If you’re a sole proprietor, this will be your legal name. Make sure it matches your Social Security records to avoid any discrepancies.
3. Enter Your Business Name (Line 2): If you’re operating under a different name, such as a DBA (Doing Business As), this is where you’d include it. This line is primarily for business owners who might operate under a different business name than their legal name. 
4. Select Your Federal Tax Classification (Line 3): You’ll choose whether you’re an individual, C Corporation, S Corporation, partnership, trust/estate, or another entity type. If you’re unsure about your business type, refer to the IRS instructions for Form W-9 for guidance. This section is critical because it helps determine your tax obligations.
5. Enter Any Exemptions (Line 4): Most independent contractors and freelancers will leave this section blank. However, some entities, like corporations exempt from backup withholding, may need to enter the appropriate “Exempt payee code.” If FATCA (Foreign Account Tax Compliance Act) reporting applies to you, you’ll enter the relevant code in this section. The IRS instructions can help you determine if this applies to you.
6. Provide Your Address (Lines 5-6): Enter your mailing address where you’d like to receive important tax forms like 1099s. This address should match the one you use on your tax returns. If you run a business, use the correct address that ties to your business for tax purposes.
7. List Account Numbers (Line 7): This section is optional but helpful for record-keeping. You can provide account numbers or identifiers that help the requester link your Form W-9 to specific accounts. For example, if you are listed as a supplier or contractor with an account number in their system, it’s helpful to include that here.
8. Enter Your TIN (Part I): Provide your Taxpayer Identification Number (TIN). This is usually your Social Security Number (SSN) for individuals and sole proprietors. For businesses, you’ll enter your Employer Identification Number (EIN). If you’re in the process of applying for an EIN and don’t have it yet, write “applied for” in this section to avoid issues with backup withholding.
9. Certify and Sign (Part II): The final step is to sign and date the form, certifying that the information you’ve provided is correct. By signing, you also confirm under penalty of perjury that you are not subject to backup withholding (unless notified otherwise) and that your TIN is accurate. Double-check all your information before submitting it to avoid any issues with the IRS.

How to Securely Submit the Form

Once you’ve filled out Form W-9, send it directly to the person or business requesting it, not the IRS. Since Form W-9 includes sensitive information like your TIN, you must be cautious when sharing it. If you’re submitting the form electronically, use a secure, encrypted method and verify that the requester is legitimate to avoid phishing scams. You can also opt to send it via certified mail or hand-deliver it to the requester for added security.

What Happens if You Don’t Submit a W-9?

If you don’t submit a W-9 when requested, it can result in backup withholding. This means the company paying you is required to withhold 24% of your payment and send it to the IRS. This backup withholding occurs because the IRS needs to ensure taxes are being paid on income earned.

Additionally, not providing your TIN when required can result in penalties and delays in receiving tax documents, which could complicate your tax filing process.

TIP: Always keep an updated copy of your W-9 on file to avoid any delays in receiving payment or potential backup withholding. You must provide accurate information, as incorrect details can lead to reporting errors or IRS penalties.

FAQs About IRS Form W-9

1. What is the difference between a W-9, W-4, and W-2?

A W-9 is used by independent contractors to provide their taxpayer identification number (TIN) to businesses that need it for tax reporting. A W-4 is filled out by employees to let their employer know how much tax to withhold from their paycheck. A W-2 is provided by employers to employees at the end of the year to summarize total earnings and taxes withheld, which employees use when filing their tax returns.

2. Is Form W-9 required for every contractor? 

Yes, when a business pays an independent contractor $600 or more in a year, they must request a completed W-9 form from the contractor. This form provides the necessary taxpayer identification information to report the payments to the IRS using Form 1099-NEC or 1099-MISC.

3. Do I need to file my W-9 with the IRS? 

No. The W-9 is provided to the person or business requesting it, but it is not submitted to the IRS.

4. Can I submit Form W-9 electronically? 

Yes, in many cases, businesses and financial institutions allow electronic submission of Form W-9. Just be sure the platform is secure to protect your personal information.

5. Can I fill out a W-9 if I don’t have an SSN or EIN?

You must apply for a taxpayer identification number before completing your W-9. Without a valid TIN, the company paying you may be required to withhold 24% of your income for backup withholding.

6. How often should I update my W-9? 

You should update your Form W-9 anytime there is a change in your information, such as your name, address, or tax classification.

Final Thoughts

IRS Form W-9 is essential for both taxpayers and businesses. For taxpayers, it ensures your payments are reported correctly, and for businesses, it helps fulfill reporting requirements. Make sure your form is complete, accurate, and submitted on time to avoid issues like backup withholding and penalties. 

If you’re unsure about any part of the form or want to avoid potential penalties, it’s always a good idea to consult with a tax professional. They can provide guidance specific to your situation and help you stay compliant with IRS regulations.

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