Freelancers and self-employed not only run their own businesses and look for clients but also maintain documentation and fill out tax papers. One of the most commonly used forms is the W-9 form for an independent contractor. If you want to know more about its features, IRS requirements, and differences from other forms, read this post.
What Is the W-9 Form?
The W-9 is a form issued by the IRS and filled out by freelancers to provide information about their business to third parties. The second title of the document is the “Request for TIN and Certification.” Although the tax office issues it, it does not process completed forms. It should be given to a person or organization that requested this file from you. There are many uses for W-9; typically, your clients need it to fill out their tax returns. However, there are other situations, which we will consider below. Keep in mind that the W-9 form meaning implies that your boss sees you as a freelancer.
Who Is Required to Fill Out a W-9?
The form is completed at the request of companies or individuals for which you perform certain work as a freelancer, vendor, or independent contractor. Staff members whose employer withholds taxes from their salary do not need to complete the form. There are several W-9 requirements that you should meet when applying:
- US citizenship or residency;
- annual income from cooperation with one company is over $600;
- you do not work full-time.
If you meet these criteria, the fastest way to complete the form is to use the printw9form.com online editor. The paper is required by the companies you work for to file their tax returns. Also, the details of this document may be necessary for banks, real estate agencies, and other financial institutions when working, for example, with student loans or debts. In addition to these situations, the form may be needed when depositing and investing money and when income and other tax data verification is necessary.
How to Read and Fill Out Form W-9?
The original IRS file is six pages long. However, the form itself occupies only the first sheet; everything else is detailed instructions to get all the things right. By and large, there is nothing complicated in filling out this document. You do not need to perform complex mathematical calculations and use information from other tax forms. Here is how to complete a W-9:
- Enter your name as indicated on your tax return.
- Type a different name if you use another name for the business. It can be a sole proprietor’s name or another entity.
- Pick the tax classification type from the options provided. You have five items to choose from; only one box needs to be ticked.
- If you are exempt from backup withholding, indicate it in the fourth paragraph. Most taxpayers should skip this point.
- Enter your full address. If your physical and work addresses differ, choose the one you provide on your tax return.
- Additionally, you can specify your account numbers (this item is optional).
- Enter your TIN. It can be SSN or EIN.
- Review the statements in Part II, affix your signature as evidence, and indicate the date the document was completed.
Unlike many other tax forms, the W-9 does not have a fixed deadline. It is filled out at the request of interested parties and transferred to them within a specified period. However, it is recommended to do it before getting into any work to clear up any misunderstandings.
At first glance, this document may seem too simple. Although there is nothing complicated in filling it out, it is essential for your customers. So, what is a W9 for a business? As recipient companies use your form’s information to complete their tax filings, it must be as accurate and correct as possible. You will be subject to civil or even criminal penalties if you refuse to complete the form or knowingly provide false information.
Special Considerations When Filing Form W-9?
W-9 contains sensitive data, like all tax forms, which is subject to extremely careful processing and storage. If you did not expect to receive a request to fill it out, do not rush to do it right away. Make sure the request came from a trusted person and not scammers. Moreover, you need to check the basis for such a request to avoid sharing your tax information with everyone.
Also, in most cases, signing this form is not required (according to IRS guidelines). However, since the signature acts as confirmation of the specified data correctness, some recipients may consider the document incomplete without it. To avoid misunderstandings, put your signature in the appropriate box.
If you are sure the request to complete the W-9 came from reliable persons, you can hand them the finished document in person, but an easier way is to use email. Fill out the form electronically through the specified online editor and send it to the recipient. Keep in mind that the IRS encourages organizations that need your business details to provide the required blanks to save you the hassle of finding the right template.
Form W-9 vs. Form W-4
Some forms may be similar in content, but their purpose is very different. Let’s compare W4 vs. W9, two documents used to request employee data. If you are self-employed and do not work for a company as an employee, you pay your own taxes and make Medicare contributions. For such workers, there are separate tax forms that they fill out on their own, including W-9. That is, your employer, for whom you currently work, pays you full salary without withholding any deductions.
If you are a full-time employee, your boss is responsible for paying taxes, which is why part of your salary is withheld. Such individuals are required to complete a W-4 when applying for a job, providing employers with information about themselves as taxpayers, dependents, and other critical details. Remember that some dishonest managers may cheat and hire employees not as full-time workers but as freelancers to save money. When concluding an employment agreement, it is crucial to clarify the format of your working relationship right away.