What Is Form W-9?
A W-9 form is an Internal Revenue Service (IRS) tax form that is used to confirm 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.
Key Takeaways
- The W-9 is an official form furnished by the IRS for employers or other entities to verify the name, address, and tax identification number of an individual receiving income.
- The information gathered from a W-9 is used to generate a 1099 tax form, which is required for income tax filing purposes.
- Information collected on a W-9 cannot be disclosed for other purposes under strict privacy regulations.
- Independent contractors must often provide a W-9 to companies they work with for tax purposes.
- Failure to furnish a W-9 can result in your client withholding taxes at a 24% rate.
Understanding Form W-9
A W-9 form is a formal written request for information and is used solely to confirm a taxpayer’s identification number (TIN). Employers or entities required to file an informational document with the IRS, such as Form 1099, must obtain your TIN to report earnings or losses affecting your federal tax return or taxable income. For individuals, the TIN will generally be their Social Security Number (SSN).
The W-9 differs from a W-4 Form, which employees provide to employers to arrange tax withholdings. The taxes based on information in the W-9 are the responsibility of the TIN holder unless subject to backup withholding, which needs to be indicated on the W-9.
Uses of Form W-9
The information obtained on a W-9 form is primarily used to create a version of Form 1099, which contains data about income not typically listed on a W-2. This income can include payments made under a contract, certain real estate transactions, dividends paid on investments, and more.
For non-U.S. residents, the IRS requires a W-8 Form instead of a W-9 form. Form 1099 is issued once the minimum income threshold of $600 is reached, though lower amounts must still be reported by the TIN holder.
How to Fill Out Form W-9
Form W-9 is straightforward, but here’s a step-by-step guide:
- Line 1: Enter your name as shown on your tax return.
- Line 2: Enter your business name or “disregarded entity” name if different from your personal name. For instance, if you’re a sole proprietor conducting business under another name.
- Line 3: Select your business entity type: sole proprietorship, partnership, C corporation, S corporation, trust/estate, limited liability company, or “other.”
- Line 4: Provide any exemptions, if applicable. Most will leave this blank unless subject to special conditions like backup withholding.
- Lines 5-6: Provide your complete address (street, city, state, ZIP) where the IRS should send tax return-related documents.
- Line 7: Optionally, provide the requester’s name and address for your records.
- Part I: Provide your tax identification number, such as your SSN or Employer Identification Number (EIN).
- Part II: Certify that all information provided is correct, and sign the form under penalty of perjury.
Special Considerations When Filing Form W-9
Signing Form W-9
If you have been notified that you are subject to backup withholding for failing to report all interest and dividends, you must cross out item 2. Generally, signing the form is optional unless the requester demands it be completed properly.
Returning Form W-9
Deliver your completed W-9 form to the requester in person if possible. If not, mailing it is secure. Email should be the last resort due to identity theft risk, and it should be encrypted.
Failure to Remit Form W-9
Failing to submit a Form W-9 leads to repercussions like mandatory 24% tax withholding and penalties such as a $50 fine for failing to furnish a correct TIN or up to $500 for making false statements. There are also civil and criminal consequences for misuse or disclosure of someone else’s W-9 information.
Form W-9 vs. Form W-4
Form W-9 is used by independent contractors and freelancers to provide information needed for filing taxes. In contrast, Form W-4 is filled by employees to direct their employer on how much federal income tax to withhold.
Who Must Complete a W-9 Form?
A Form W-9 must be completed by those receiving certain types of payment in the future. This includes freelance workers, gig employees under non-employment structures, and those participating in various transactions leading to IRS filings.
The Bottom Line
Form W-9 is an IRS tax form used to request information from U.S. citizens or resident aliens engaging in various income-generating activities. This information is crucial for generating accurate 1099 forms, and non-compliance can result in significant penalties.
Related Terms: Taxpayer Identification Number, Social Security Number, Form 1099, income tax, W-4 form
References
- Internal Revenue Service. “Form W-9, Request for Taxpayer Identification Number and Certification”, Page 1.
- Internal Revenue Service. “About Form W-4, Employee’s Withholding Certificate”.
- Internal Revenue Service. “Am I Required to File a Form 1099 or Other Information Return?”
- Internal Revenue Service. “About Form W-2, Wage and Tax Statement”.
- Internal Revenue Service. “General Instructions for Certain Information Returns”, Page 18.
- Internal Revenue Service. “About Form W-8 BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)”.
- Internal Revenue Service. “About Form 1099-MISC, Miscellaneous Information”.
- Internal Revenue Service. “Earned Income, Self-Employment Income and Business Expenses”, Select What is Earned Income?
- U.S. Equal Employment Opportunity Commission. “Employee Rights”.
- Internal Revenue Service. “Single Member Limited Liability Companies”.
- Internal Revenue Service. “Limited Liability Company - Possible Repercussions”.
- Forbes. “What Is a Disregarded Entity?”
- Internal Revenue Service. “Publication 3402, Taxation of Limited Liability Companies”.
- Internal Revenue Service. “Form W-9, Request for Taxpayer Identification Number and Certification”, Page 3.
- Internal Revenue Service. “Form W-9, Request for Taxpayer Identification Number and Certification”, Pages 3-4.
- Internal Revenue Service. “Form W-9, Request for Taxpayer Identification Number and Certification”, Page 4.
- Internal Revenue Service. “Form W-9, Request for Taxpayer Identification Number and Certification”, Pages 1, 2-3.
- Internal Revenue Service. “Backup Withholding”.
- Internal Revenue Service. “Resident Aliens”.
- Internal Revenue Service. “About Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual”.
- Internal Revenue Service. “Foreign Account Tax Compliance Act (FATCA)”.
- Internal Revenue Service. “General Instructions for Certain Information Returns”, Pages 26-30.
- Internal Revenue Service. “Form W-9, Request for Taxpayer Identification Number and Certification”, Pages 2-3.
- Internal Revenue Service. “Form W-4, Employee’s Withholding Certificate”, Pages 1-2.
