Tax time is overwhelming for many people. Especially for those who have recently changed their work status for example from a salaried to contracted employment. In this case, the forms that you’re supposed to complete may be absolutely unfamiliar to you. However, it’s important to figure out everything as soon as possible. Let’s take a look at tax documentation for employers who hire freelancers to do the work for them.
All independent contractors complete the IRS W9 fillable form to give the employer their TIN, name and contact information. An employer in his turn must use the information provided by the employee to fill out his Form 1099-MISC. If the employer doesn’t get W-9 on time, he must send the contractor second request.
In fact, it is created for information purposes only. It isn’t submitted to the IRS. An employer needs it to inform the Internal Revenue Service that he contracts with freelancers. The copy of the form is then maintained for the records.
Employers who are new to the game, may feel confused when something goes wrong. For example, what if you’ve lost the W-9 completed by the contractor? Actually, it’s not a problem at all. You keep paying a freelancer for his work as agreed. When the tax season comes you simply issue Form 1099-MISC to the freelancers to show him the amount of annual earnings.
The information that an independent contractor provides on W9 form isn’t editable. If it does not coincide with the data on Form 1099-MISC a freelancer will have to complete the form once again.
Sending a request for the employee’s TIN is obligatory. If an employer doesn’t do it, he risks being fined. A freelancer in this case is also exposed to penalties.