What is Form W9?
Form W9, also called as Request for Taxpayer Identification Number and Certification, and is normally used in the United States Income Tax system to save the information of taxpayers with the Internal Revenue Service (IRS). It has fields such as name, address and taxpayer’s identification number such as Social Security Number or Employer Identification Number. This form, need not to be submitted to the IRS but it is maintained by a third party for verification purpose and the information mentioned on the form along with the payment made, on a Form 1099.
How to Complete IRS Form W-9?
Form W-9 is a normal IRS document which you need to fill and submit at the time of your joining with your employer as a regular employee or an independent contractor. Once filled, you need to submit the same with your client or employer, who then use the information mentioned in your W-9 form to update Internal Revenue System (IRS) about your earnings. Based on the information mentioned in your W-9 form, your client or employer will provide you Form 1099 to calculate your income taxes. In order to fill W-9 form, you need to follow following steps:
A) Make sure you have got the right form: In order to check if the form given to you by your client or your employer is a right one or not, you can check the same on the IRS website.
B) Fill in the details in the Section One: In section one, you need to fill in your basic details such as your name, addresses etc. You need to fill in the details as per the details asked such as:
- In box 1, you need to fill in your full name.
- In box 2, you need to fill in your business name, in case you have one. In any other case, leave it blank.
- Box 3 of section one, is to check legal status of your business and in case you are filling the form for yourself and you are not being contracted or hired by a company, you need to tick the “individual” box.
- In case you are an individual, you can leave the box 4.
- In box 5, you need to mention your street address.
- In box 6, you need to mention your city, state and zip code.
- Box 7 is an optional field and you need to fill in the box if you have an account number which your employer might need.
C) Fill in the details in the Part One: Part One needs you to fill your Social Security Number or Employer Identification Number or Taxpayer Identification Number, also called as TIN. Depending on your category, you can fill in the right information, for example,
- In case you are an individual, fill in your social security number in the appropriate space.
- In case you are a resident alien, sole proprietor, or disregarded entity, fill in your Taxpayer Identification Number. And in case you don’t have one, you can easily get one.
- For all other entities, you need to fill in your Employer Identification Number and in case you don’t remember your TIN or Employer Identification Number or Social Security Number, you can call IRS at 800-829-1040 or the Social Security Administrator at 800-772-1213.
D) Sign and date the form in Part II: Before you sign and put the date on your form in the Part II, proof read the form once to ensure that all the entries are filled with correct information. In case there is any error or wrong information, repeat the process from Step A to Step C. In case if everything is correct and you have finished reading the information, fill in the form II by signing it with your legal sign which is your name and date. By doing so, you are stating the following:
- TIN number provided by you is correct.
- You are not required to have 28% of your income withheld for taxation purpose.
- You are either a citizen, resident alien or a business entity registered or recognized by the concerned authorities or a legal non-business entity.
- You have provided correct information regarding your Foreign Accounts Tax Compliance Act (FATCA) requirements.
- You need to be very careful with the information you are providing because in case if any of the information turned out to be false, you could face criminal charges including perjury.
E) Send the completed W-9 form to your client: Once the form is filled, signed and dated, you need to submit the same with your client or the employer, who will further use the information filled by you at the tax time. Form W-9 is for whoever will be paying you for the services rendered. Although this form is submitted with the IRS, you need not send this form to the same by yourself.
F) Keep copies of the completed W-9 form: It is always better to keep a copy of the form with yourself and you can also use your copy to compare to your 1099s and to contact a company or a client in case you are not able to find your 1099.
How to Use the Form W-9 Correctly?
Apart from filling the Form W-9 correctly, you must also know how to use the form correctly. You can use the form W-9 correctly as per mentioned in the steps below:
a) Fill out a form W-9 for each client or employer for whom you complete work: When you render your services to anyone or to a business, they will have your information on their records to help prepare their returns. In case of businesses, they will file a 1099-MISC for freelance or contracting work and clients will use your information mentioned on the W-9 form on the 1099-MISC, which will be sent to the IRS and to you as well , for your own taxation purpose. This information is shared with you usually in the late January.
b) Fill out the form W-9 for investment purposes: The form W-9 is also used in the certain cases which are less common and are related to the investment and debt collection, such as:
- Real estate transactions.
- Payment of mortgage interest.
- Acquisition or loss of secure property.
- Cancelled debts.
- Individual retirement arrangement (IRA) investments.
c) Understand what “backup withholding” means: Although Form W-9 is a simple document, mention and discussion of “backup withholding” creates a bit of confusion for the person who is filling the form and thus it is very important for you to understand what it means. Backup withholding allows the IRS to claim income tax from the investors’ earnings, where an investor tries to claim his money before tax has been levied on it. The payment owed is called “backup withholding” and in most cases, you are exempt and it will be your client who owes the 28% income charge. In case your clients do not collect the information from you, i.e. if they have not given you the form W-9 or if you have filled incorrect information on the form, it becomes the duty of your client to furnish the backup withholding fees to the IRS.
How Can You Get Form W-9?
As an employer, you can get paper copies of Form W-9 by calling 1-800-TAX-FORM, otherwise the faster way to get one is to log on www.irs.gov and download the same.
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