What Is A W-9 Form Used For?
In the U. S. there are various tax forms that should be submitted on regular basis. One of the frequently used is form W-9, Request for Taxpayer Identification Number and Certification. It is prepared with the purpose of receiving information from non-employees such as independent contractors and freelancers. In case the employer pays an individual $600 or more, he/she is obliged to report to the IRS the amount paid to independent contractors. For this purpose 1099 MISC should be completed. This document is always prepared on the basis of details provided in W-9.
How to Fill a form W-9 Properly?
To avoid any delays or rejections a document has to be duly executed. The employer should provide following information:
- full name as is shown on income tax return;
- a business name (for entity);
- tax classification (i.e. Individual / Sole proprietor or single-member LLC, C Corporation, S Corporation, Partnership, Trust / estate, LLC);
- address;
- requester`s name;
- SSN for individuals and employer identification number for entities (for resident alien provide ITIN)
- amount of taxes withheld from earnings for paying a federal income tax;
- current date;
- signature.
Backup Withholding
Such a document asks if you are eligible for withholding. If an individual isn’t eligible, the employer has to withhold 28% of your pay in case you are the contractor. Further, the amount deducted will be sent to the IRS. Payments that might be subject to such withholding include:
- interest;
- tax exempt interest;
- dividends;
- broker and barter exchange transactions;
- rents;
- royalties;
- nonemployee pay.
Note that it is required to update information specified in W-9 if TIN or personal details change. This form is always sent to an employee, but not to the IRS. In case you are not a freelancer or independent contractor, you have to prepare W-4.