If you’re trying to sort out your taxes it can be quite easy to lose your head in it all.
There’s so much information to try and process it can feel a little like it’s all going in one ear and straight out the other.
Learning and understanding the different forms and what information they are asking of you can be half of the battle.
This is why throughout this article we will be going into more depth about the W-9 form and everything you’ll need to know when filling it out.
What Is IRS Form W-9?
A W-9 is a very common IRS form. You’ll likely have to use one of these forms if you are either an independent contractor, a freelancer, or have your own business.
More specifically, you’ll be likely to fill out one of these forms if your client requires it.
A client may require you to fill out one of these forms so that they can prepare a 1099-NEC form, to report the payments they are making to you at the end of a tax year, or to find out if you’re subject to backup withholding.
Essentially you are likely to use this form any time that you engage in a transaction that is both taxable and needs to be reported to the IRS.
Who Asks For A Completed W-9?
It is the business or person who pays you’s responsibility to request the form on your behalf. It is important to bear in mind though that they are not responsible for filing this form with the IRS.
This person will only keep the form on a file so that they can use the information when they need to prepare other paperwork such as 1099 forms and 1098 forms.
Who Completes This Form?
You’ll need to complete this form any time that you engage with a business where you need to report the information to the IRS.
An example of this would be receiving payments for your services as an independent contractor or paying off the interest on your mortgage.
You will need to fill out this form, the company you are doing business with uses this form to collect some of your more personal information that they will need such as your taxpayer identification number.
When Do You Need To Ask For A W-9?
If you book a freelancer or a contractor, you should always ask them to fill out a W-9 before they begin any of the work.
This is in your best interest as failure to do so can land you in quite a sticky situation. You may even be required to do a backup withholding.
What’s Backup Withholding?
This is where money is taken out of your pay and is given to the IRS where it normally wouldn’t be.
This is sometimes done to ensure that the IRS receives the correct amount of taxes that are owed to them.
You may be subjected to backup withholding if you fail to supply the correct information or if the IRS has reason to believe that you own them money and they are unable to collect it in any other manner.
Completing The Form
Line 1 – Name
If you are submitting the form as an individual you should always write the name that is shown on your tax return.
If you have recently changed your last name, perhaps after getting married, but haven’t yet informed the SSA then you should always go with the name that is currently shown on your social security card as well as your new last name.
If you are completing the form as a partnership then you should always write the same name as the tax return on the first line, and write the business or trade name on the second line.
Line 2 – Business Name
If you are completing this form as part of a business you should always write the business name on the second line.
Line 3 – Federal Tax Classification
You need to make sure that you only select one box in the third line of the form. Pick the option that is most appropriate for the person named in line one.
Line 4 – Exemptions
Some organizations and businesses will be exempt from backup withholding under a few particular instances. Should these instances apply to you, you’ll need to declare so here.
You’ll do this by choosing the letter that represents your reason on the form.
Line 5 & 6 – Address
Here you just need to fill out your address. Ensure that it is written correctly as this is where your 1099 will be sent to.
Line 7 – Account Number
In this section, you can write your account information for your bank.
Tin & Certification
You will also need to provide your taxpayer identification number. This will need to be your social security number if you’re applying as an individual.
If you are applying as a partnership you may also be asked to provide your employer identification number.
Then you’ll need to provide certification, this essentially means that you’ll need to sign and date it.
By doing so you are declaring that all the information you have given throughout the document is true to the best of your knowledge.
It can seem a little scary sorting out your tax forms, especially when you start to concentrate on the implications that can come from doing them wrong.
However, as long as you always read the questions and answer carefully and honestly you shouldn’t have an issue.
Throughout this article, you should hopefully have learned a little more about these forms, the information that they ask of you, and when you should be filling them out or requesting them.
As long as you follow the advice given today, you should hopefully have a fairly easy and stress-free experience when it comes to completing any W-9 IRS forms.