What is a W-9
A W-9 form, officially known as the “Request for Taxpayer Identification Number and Certification,” is a tax form used in the United States. It’s primarily used to provide information required by the Internal Revenue Service (IRS) for reporting purposes. Here’s a detailed breakdown of its purpose and the parties who typically need to use it:
Purpose of the W-9 Form
- Taxpayer Identification Number (TIN): The W-9 is used to collect a person’s or entity’s TIN, which is typically a Social Security Number (SSN) for individuals or an Employer Identification Number (EIN) for businesses.
- Certification: The person or entity fills out the W-9 to certify their TIN. This is important for tax reporting purposes.
- Used by Payers: Businesses or individuals who make certain types of payments use the information on the W-9 to file information returns with the IRS, reporting the amount paid during the tax year.
- Non-Employee Compensation: It’s commonly used to report money paid to independent contractors (as opposed to wages paid to employees, which are reported using a W-2 form).
Who Needs to Use a W-9
1. Independent Contractors and Freelancers
- Situation: When they perform work for a company and receive payment.
- Purpose: The company will use the contractor’s W-9 to report payments to the IRS.
- Situation: When providing consulting services to businesses.
- Purpose: For the business to report payments made to the consultant.
- Situation: Especially when receiving payments for legal services or settlements.
- Purpose: For clients or other entities to report payments to the attorney or law firm.
- Situation: When they lease property to a business entity.
- Purpose: For the business tenant to report rent payments to the IRS.
5. Gig Economy Workers
- Situation: For various services provided through gig platforms.
- Purpose: For the platform or clients to report payments.
6. Financial Institutions
- Situation: When an individual opens a new bank account or investment account.
- Purpose: To report interest, dividends, or broker payments.
7. Corporations and LLCs
- Situation: When they engage in certain transactions or business relationships.
- Purpose: For their clients or partners to report payments made to these entities.
|Purpose of W-9
|Performing work for a company
|Company reports payments to IRS
|Providing consulting services
|Client reports payments made
|Receiving legal service payments
|Client/entity reports payments made
|Leasing property to businesses
|Business tenant reports rent payments
|Gig Economy Workers
|Providing services via platforms
|Platform/clients report payments
|Reporting interest, dividends, broker payments
|Corporations and LLCs
|Engaging in transactions/business relations
|Clients/partners report payments made
Important Points to Note
- Not for Employment: The W-9 is not used for regular employment relationships. Those situations require a W-4 form.
- Privacy and Security: Because it contains sensitive information, it’s important to handle the W-9 securely and share it only with trusted entities.
- IRS Requirements: The information on a W-9 must be accurate to avoid penalties from the IRS for incorrect reporting.
In summary, the W-9 form is an essential document for tax reporting in the U.S., used to gather taxpayer identification information from individuals and entities that receive payments for services or other specified transactions. It’s crucial for the accurate and compliant reporting of taxable income to the IRS.
How do I complete a W-9
Free W-9 Downloads (PDF)
DOWNLOAD: W-9 Form 2023
DOWNLOAD: W-9 Form 2024