What is a W-9 Form and How to Fill It?

The W-9 form, known as the “Request for Taxpayer Identification Number and Certification,” is an IRS document used to verify your identity in the United States. It is used to confirm your tax identification number (TIN), verify your identity, and file accurate tax reports (Form 1099) if they pay you more than a certain amount ($600 in 2024) for freelance or contract work.

Understanding the Purpose of W-9 Form

A W-9 form is a standard documented request to confirm a person’s taxpayer identification number (TIN). TIN is the number that denotes any gains or losses that impact your tax return.

Let’s see what are its core functions:

• Validating Taxpayer Details: The W-9 requires your legal name, address, and Taxpayer Identification Number (TIN). Your TIN can be your Social Security number (SSN) or Employer Identification Number (EIN) for individuals and businesses, respectfully.
• Reporting Form 1099: This form reports the amount paid to freelancers. An employer is required to file a Form 1099 when they hire a freelancer for more than a specific threshold of $600 in 2024. Form 1099 is mandatory for completing the process accurately.
• Preventing Backup Withholding: You must ensure that filing form W-9 is completed without any incorrect information, such as your TIN. In that case, you may be subject to backup withholding.

Steps to file W-9 Form

Form W-9 is one of the simplest IRS forms to complete. If tax forms make you apprehensive, don’t bother. We’ll direct you through the right path to fill it out.

Step 1: Obtaining the W-9 Form

You can get the form from the https://www.irs.gov/- official website of the IRS. Find the downloadable version here.

Form W-9 (Rev. March 2024) (irs.gov)

Step 2: Completing the W-9 Form Accurately

Part I: Taxpayer Name and Address

Enter your legal name exactly as it appears on your tax return.

• Line 1: If you are a sole proprietor operating under a business name, include it along with your legal name on Line 1.
• Line 2: Add your business name if it differs from your legal name.
• Line 3: Select which type of business entity you are for federal tax classification: sole proprietorship, partnership, C corporation, S corporation, trust/estate, limited liability company, or “other.” Check the appropriate box, and ensure only you have selected only one classification.

Part II: Tax Classification

Here, you need to identify your tax classification for tax purposes from:

• Individual/Sole Proprietor if you are a self-employed individual with no formal business structure
• Partnership if you operate a business with one or more partners.
• Limited Liability Company (LLC) if your business is a Limited Liability Company, i.e. if your business is an LLC in New Jersey, you might want to consider updating your New Jersey LLC registration to ensure everything is current and compliant with state regulations.
• C Corporation or S Corporation if your business is incorporated as a C Corp or S Corp.
• Trust/Estate if you are a trust or estate.

Part III: Federal Tax Classification Information (Optional)

It might apply to foreign entities or individuals with specific tax classifications. You should leave it blank if it doesn’t apply to you.

Part IV: Exemptions from Withholding

Here, you can claim an exemption from backup withholding under specific cases that imply when the payer withholds a share of your payment and mails it to the IRS.

Note: You should consult a tax advisor if you consider qualifying for an exemption from backup withholding to ensure you satisfy the specific criteria.

• Your Signature and Date:

Sign and date the form on the designated lines to certify the accuracy of the information provided.

Step 3: Submitting the Completed W-9 Form

After completing the Form W-9, you must return it to the party who requested it from you (business or institution) as per their instructions, which can be through mail or in person.

Who Needs to Fill Out a W-9?

Any person paid on non-employee billing needs to file a W-9 form as there are multiple instances where they may need this form. For example, individuals who pay home mortgage interest, or earn interest on any sort of real estate need to file Form 1098/1098. So, to ensure these forms are complete, the other party might ask to file information through Form W-9.

Role of W-9 for Business Records

While the major use of W-9 is for tax purposes, it also plays a role in ensuring the accuracy of business records.

• Verification of Contractor Information: The W-9 provides a documented record of the contractor’s legal name, address, and TIN. It can help resolve any discrepancies or disputes in the future.
• Compliance with Regulations: Businesses are required to maintain records of payments made to independent contractors. The W-9 documents that the business took steps to obtain the contractor’s correct tax information.

In conclusion, the W-9 goes beyond just tax reporting. Form W-9 is an IRS tax form used to collect information from U.S. citizens and resident aliens. It is essential for completing Form 1099 and is particularly relevant for independent contractors, freelancers, and unrelated vendors.

Form W-9 is beneficial for freelancers, contractors, and companies, providing exact data exchange.

Frequently Asked Questions