Form W-9

What Is Form W-9: Request for Taxpayer Identification Number (TIN) and Certification?

A W-9 form is an Internal Revenue Service (IRS) tax form that is utilized to affirm a person's name, address, and taxpayer identification number (TIN) for employment or other income-generating purposes. The confirmation can be requested for either an individual defined as a U.S. citizen or a person defined as a resident alien.

A W-9 form is otherwise called a Request for Taxpayer Identification Number and Certification form.

Who Can File Form W-9: Request for Taxpayer Identification Number (TIN) and Certification?

A W-9 form is a formal written request for information in particular and is utilized solely to affirm a person's taxpayer identification number (TIN). An employer or other entity that is required to file an informational document with the IRS, for example, Form 1099, must get your right TIN to report any earnings or losses that might influence your federal tax return or your taxable income. For most individuals, the TIN will be their Social Security Number (SSN).

The W-9 varies from a W-4 Form — which is all the more commonly supplied by employees to direct employers — in that the W-9 doesn't innately set up for the withholding of any taxes due. Any required taxes in light of gains connected with the provided W-9 are the responsibility of the TIN holder listed on the document except if the taxpayer is subject to backup withholding. On the off chance that backup withholding is required, this will should be noted on the W-9, to appropriately inform the entity getting the information of the need to likewise withhold.

What Is Form W-9 Used For?

The information got on a W-9 form is most frequently used to make a variant of Form 1099. A 1099 form contains information about any income that might have been received by the TIN holder that would not regularly be listed on a W-2 form. This incorporates, however isn't limited to, income paid to a person as part of a contract; certain real estate transactions; dividends paid against a venture; and different other financial transactions.

The IRS requires the individuals who are not defined as U.S. citizens or resident aliens to utilize the proper W-8 Form in place of a W-9 form.

Form 1099 is simply required to be issued once the base income threshold is reached, which for most miscellaneous income is set at $600 for tax years 2020 and 2021. Sums under this threshold must be reported as income by the TIN holder yet don't need a 1099 form.

Despite the fact that employees are legally required to supply certain personal information to their employers, a worker's privacy is protected by law. An employer who reveals a worker's personal information in any unauthorized way might be subjected to civil and criminal arraignment.

How to Read and Fill Out Form W-9

Form W-9 is quite possibly of the most straightforward Ir forms to complete, however in the event that tax forms make you nervous, just sit back and relax. We'll walk you through the legitimate way to complete it.

All pages of Form W-9 are accessible on the IRS website.

Step 1

Enter your name as shown on your tax return.

Step 2

Enter your business name or "ignored entity" name, if not quite the same as the name you entered for step 1. For instance, you may be a sole proprietorship, yet for the purpose of marketing, you don't involve your personal name as your business name; all things considered, you are "carrying on with work as" another name. You would enter that name here. Concerning the dismissed entity part, in the event that you don't have the foggiest idea what it is, you most likely aren't one. A common dismissed entity type is a solitary part limited liability company. Sole proprietorships and S corporations are never classified as dismissed substances.

Step 3

What type of business entity are you for federal tax classification: sole proprietorship, partnership, C corporation, S corporation, trust/estate, limited liability company, or "other"? Check the suitable box. In the event that you don't know, you're presumably a sole proprietorship, since you would have needed to file a ton of paperwork to become one of different substances.

Step 4

Exemptions. Odds are you will leave these cases clear. The following are two or three special cases:

Payees that are exempt from backup withholding, like corporations (as a rule), could have to enter a code in the "Exempt payee code" box. The Form W-9 directions list the exempt payees and their codes and the types of payments for which these codes ought to be utilized. Corporations finishing up a W-9 for receipt of interest or dividend payments, for instance, would enter code "5."
Payees that are exempt from reporting under the Foreign Account Tax Compliance Act (FATCA) could have to enter a code in the "Exemption from FATCA reporting code" box. Neither of these containers will apply to the common independent contractor or freelancer.

Step 5

Provide your street address, city, state, and postal division. What in the event that your place of residence is not quite the same as your business address? Which address would it be advisable for you to provide on Form W-9? Utilize the address that you will use on your tax return. For instance, in the event that you're a sole owner who rents office space, however you file your tax return utilizing your personal residence, enter your street number on form W-9 so the IRS won't experience difficulty matching your 1099s with your Form 1040.

Step 6

In this discretionary step, you can provide the requester's name and address. You should finish up this crate to keep a record of to whom you provided your tax identification number.

Step 7

The IRS calls this section Part I, which needs to make you wonder what that multitude of steps you just completed were. Here, you must provide your business' tax identification number, which will either be your individual Social Security Number on the off chance that you're a sole proprietorship, or your employer identification number (EIN) on the off chance that you're one more type of business. Now, a few sole proprietorships likewise have EINs, yet the IRS inclines toward that sole owners utilize their SSNs on Form W-9. Once more, doing so will make it simpler to match any 1099s you receive with your tax return, which you will file under your SSN.

What in the event that your business is new and doesn't have an EIN? You can in any case finish up a W-9 form. The IRS says you ought to apply for your number and write "applied for" in the space for the TIN. You'll want to get this number as fast as conceivable on the grounds that, until you do, you'll be subject to backup withholding. You can apply for an EIN at the IRS website. See the directions below for Step 8, Part II, for more on backup withholding.

Step 8

In Part II, you must attest to the honesty of all of your information before you can sign Form W-9. Intentionally lying on a tax form could mean you'll need to pay a fine or go to prison; the IRS doesn't play. Before signing form W-9, here are the statements you must affirm are true, under penalty of prevarication:

1. The number shown on this form is my right taxpayer identification number (or I am waiting for a number to be issued to me).

Taxpayers must utilize genuine tax ID numbers. Utilizing a "borrowed," taken, or made-up tax ID number would compare to lying after swearing to tell the truth, and include serious results.

2. I'm not subject to backup withholding in light of the fact that: (a) I am exempt from backup withholding, or (b) I have not been told by the Internal Revenue Service (IRS) that I am subject to backup withholding because of an inability to report all interest or dividends, or (c) the IRS has told me that I am presently not subject to backup withholding.

Most taxpayers are exempt from backup withholding. In the event that you have no clue about what the IRS is discussing here, you're likely exempt. On the off chance that you're not exempt, the IRS will have informed you, and the company paying you has to know since it is required to withhold income tax from your pay at a flat rate of 24% (starting around 2020) and send it to the IRS. Incidentally, now you know another valid justification not to cheat on your tax return: You could need to educate a future client, and that could make the company think twice about you. Thing (c) essentially says that assuming you were once subject to backup withholding yet aren't any longer, nobody has to know.

3. I'm a U.S. citizen or other U.S. person.

On the off chance that you're a resident alien, you're free. The IRS likewise considers the following to be a "U.S. person": a partnership, corporation, company, or association made or organized in the United States or under the laws of the United States; a domestic estate; and a domestic trust. In the event that your business is a partnership that has a foreign partner, special rules apply; read about them in the guidelines to Form W-9. On the off chance that you're not a U.S. citizen, you might have to finish up Form W-8 or Form 8233 all things considered.

4. The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.

You most likely won't have to worry about this one, which has to do with the Foreign Account Tax Compliance Act.

Special Considerations When Filing Form W-9

Signing Form W-9

Form W-9 advises you to cross out thing 2 above assuming you have been informed by the IRS that you are presently subject to backup withholding since you have failed to report all interest and dividends on your tax return.

You might cross out thing 2 on the off chance that you're finishing up Form W-9 regarding a real estate transaction. Thing 2 doesn't make a difference in this case, so it doesn't make any difference in the event that you're subject to backup withholding.

Now, assuming you read the fine print in the W-9 directions carefully, indicate can't help thinking that a great many people aren't required to sign this form by any stretch of the imagination. You're generally possibly required to sign it assuming the IRS has advised you that you recently provided an erroneous TIN. Details aside, however, the person who requested that you finish up Form W-9 will most likely consider it incomplete or invalid on the off chance that you haven't marked it.

Returning Form W-9

Return your completed Form W-9 to the business that requested that you finish it up. Ideally, you'll deliver it in person to limit your exposure to identity theft, however this method frequently isn't practical. Mail is considered moderately secure. Assuming you must email the form, you ought to encode both the document and your email message and triple-check that you have the beneficiary's right email address before sending your message. Free services are accessible online to assist you with doing this, yet check their notorieties before trusting your documents to them. Ordinarily the business that requirements to present a W-9 to the IRS will give you one to finish up.

Features

The information taken from a W-9 form is frequently used to generate a 1099 tax form, which is required for income tax filing purposes.
The W-9 is an official form outfitted by the IRS for employers or different substances to confirm the name, address, and tax identification number of an individual getting income.
The information collected by an entity on a W-9 form can't be unveiled for some other purpose, under severe privacy regulations.