Any independent contractor or freelancer is asked to complete the form W-9 as it should be sent to the Internal Revenue Service. The required information helps businesses to prepare tax returns for the IRS. It is necessary for any hirer to file information returns if they pays a freelancer or an independent contractor $600 or more through the year. There are few other reasons to complete this document. Look through the list below:
This document is important to confirm three things. First of all, it specifies a taxpayer ID number. Then it helps the taxpayer to avoid the backup withholding. Finally, it is needed to confirm, that the taxpayer is a United States person (including partnerships, corporations, trusts, and estates).
The confirmed ID number can’t be ever changed unless the entity changes form. For example, a company that was a sole proprietor becomes LLC.
You can be sure that the taxpayer’s status as a US person won’t change too. It may be changed in case a person actually renounces their citizenship, or a resident alien leaves the country permanently.
In fact, the only thing, that may change is whether an individual is a subject of the backup withholding. Of course, it is necessary to update information in the form W-9 according to the most recent changes and notify your payer. They are not responsible for renewing information, but for reporting requirements related to the data on the form.
Your employer has to file the 1099-MISC. For this reason he or she asks you to provide the following details:
The document should be signed. You have an option to add your signature electronically by typing, drawing or uploading.
Though the IRS doesn't give any w-9 form instructions, it’s a good idea to fill out a new sample each year. It’s not in vain that many vendors ask their payees to complete the form W-9 on yearly basis. Regarding that it takes no more than 2 minutes to do it, it’s not a burdensome. Wasting minimum time and efforts, you confirm the three important things mentioned above.
As a conclusion, it appears that there two standpoints. From a business standpoint, it useful to keep the most recent version of the form in your files. Thus, it’s acceptable to ask your vendors to update the information after a year. From a tax standpoint, it’s not necessary, unless any changes occurred. All in all, if you have more questions about specific details related to the particular situation, it’s more advisable to contact a tax professional or any good lawyer.