If you are an independent contractor or freelancer such as a vendor, consultant, accountant, or architect, the company that hires you will require you to fill out a W-9 form. This is a very straightforward way to send critical information. However, because you do not submit it directly to the IRS, you need to be cautious about who you send it to.
A W-9 form is a tax document from the IRS. It requires you to fill in your personal information such as tax ID number (TIN), Employer Identification Number (EIN), Social Security Number, name, and address. When a business hires you as a self-employed contractor and pays you more than $600 a year, you are required to fill out the W-9 form so that they can send you a 1099 form that you present to the IRS.
Companies and businesses that hire freelancers and independent contractors don’t hold back FICA taxes and income taxes. It is your responsibility as an independent contractor to meet Internal Revenue Service (IRS) tax obligations.
Who needs a W-9 form?
If you are a self-employed individual, the company or client who hires you will require you to fill out the W-9 form. Self-employed individuals include:
Freelancers: These are workers who depend on “gigs,” which are short term. They include writers and web designers, among others. They are required to provide a W-9 form on demand to clients as a fulfillment of their tax obligations.
Professional Consultants: They offer advisory services to clients on finance, marketing, information technology, and sales. They file W-9 forms in fulfillment of their tax obligations.
Independent Contractors: These are professionals who offer landscaping, architecture, and accounting on a contract basis. Limited Liability Company contractors can only fill a W-9 form if they are individual entities and not corporations.
How to File a W-9 Form
If you get nervous just thinking about tax forms, don’t worry. The W-9 is one of the easiest IRS forms to complete.
- Fill in your full name correctly at the top and ensure it matches the name on all other tax forms.
- Fill in your business name, and if you don’t have one, leave the space blank.
- Enter your business entity, such as single-member LLC, individual, sole proprietor, partnership, estate/trust business, C corporation, and S corporation.
- Enter your residential address, including apartment numbers, street names, and street numbers.
- Enter your social security number or employer identification number (EIN); for most independent contractors, the Social Security number is all that is required.
- Enter your signature and date, which is considered a declaration that all the information entered on your W-9 is verified.
What to Do if You Don’t Receive Your W-9
Financial institutions and hiring companies are required to send you a W-9 form. However, if you don’t receive yours, you can download it as a PDF from the IRS website.
When submitting your W-9, handing it over in person is the best option. However, if this is not possible, you can encrypt it freely online, email it, or use another encrypted sharing service to ensure its security. Don’t send this information in an unprotected email.
What is Backup Withholding?
This is withholding of income tax from the invoice of independent contractors by the hiring company to submit it to the IRS. If you are an independent contractor and do not provide accurate information, the company paying you is required to withhold 24% of your income and send it to the IRS. Additionally, the hiring company will withhold your income taxes if your W-9 is missing the TIN, or if it is unverifiable.
When Should You Not Send a W-9 Form?
When sent by a stranger: Remember, a W-9 form includes your personal information like your Social Security Number. Therefore, filing a W-9 form from a stranger could expose your personal information to scammers and identity thieves.
In case you receive one from a suspicious individual, ask relevant questions such as what tax forms they intend to send you. The only time you are required to file a W-9 form is when it will be needed to send back an IRS form. Seek help from a tax professional if you are unsure.
When sent by an employer: Employees should only receive a W-4 form from their employers. If you are working as a permanent employee, a W-9 could mean that you’ve been classified as a freelancer or independent contractor, and this could put you on the hook for IRS tax payments.
The IRS needs to ensure that everyone is observing their tax obligations, including independent contractors and freelancers. The hiring company or client requires a W-9 form to send back a 1099 form, indicating that the individual is fully responsible for their tax payments. If you need assistance in understanding your tax obligations, it is smart to get advice from a seasoned tax professional.
Do you have any tips to share about W-9 forms? Feel free to share them in the comments below.