Should i fill out a w9 form

In this case, W-9 forms provide information on who is working as an independent contractor, information that the IRS uses to find out how much taxes contractors should be paying. Rather, businesses who hire independent contractors are required to provide this form to the contractors, who in turn fill it out and return it to the contracting business. This reporting is necessary because businesses are not required to pay Social Security or Medicare taxes or withhold income taxes on independent contractor wages—these come out of the taxes of the independent contractors.

Thus, the IRS needs to know who is paid and how much so they know who owes those taxes, and the W-9 provides the personal information necessary to know this. Aside from financial institutions sometimes using W-9 forms to obtain information from customers to report interest or dividends, the W-9 form is used exclusively by independent contractors. Your comment is voluntary and will remain anonymous, therefore we do not collect any information which would enable us to respond to any inquiries.

However, IRS. To view this page, ensure that Adobe Flash Player version 10 or greater is installed. The information presented here is current as of the day it was presented. Any stories, names, characters, and incidents portrayed in this production are fictional. No identification with actual persons living or deceased , places, buildings and products is intended or should be inferred.

This form is used to provide the correct Taxpayer Identification Number TIN to the person who is required to file an information return with the IRS to report, for example: Non-employee compensation; real estate transactions; mortgage interest; acquisition or abandonment of secured property; cancellation of debt; and contributions to an IRA.

These are the steps to correctly complete a Form W Line one of Form W-9 asks for your name. If you are running a sole proprietorship you would enter YOUR name. The name on line 1 should never be a disregarded entity — a single owner LLC. If you have a business name, trade name, doing business as name or disregarded entity name you can enter it on line 2 business name. On line 3, select just ONE box. Check the appropriate box for the U.

Line 4 is for exemption codes. Exemption codes are for those payments that are exempt from backup withholding. Corporations are exempt from backup withholding for certain payments — — like interest and dividends with some exceptions.

Refer to the instructions provided with Form W-9 for the appropriate code to use if you believe your business is exempt from potential backup withholding. Measure content performance. Develop and improve products. List of Partners vendors. Businesses use IRS Form W-9 , Request for Taxpayer Identification Number and Certification, to get information from vendors they hire as independent contractors also called freelancers.

Neither the sender nor the recipient should send a copy to the IRS. Businesses that hire independent contractors do not withhold income tax or pay Medicare or Social Security taxes for their independent contractors , as they do for their employees. Instead, contractors are responsible for these obligations. However, the IRS still wants to know how much these contractors received to make sure they pay the taxes they owe, and it uses form MISC to gather this information.

Form W-9 also asks the person filling it out to certify that they are not subject to backup withholding. As Form W-9 requires listing a tax ID or Social Security number, both the person filling it out and the company receiving the completed form must guard it carefully during transmission and after receipt to protect against identity theft. An independent contractor who receives an unexpected W-9 should hesitate before filling it out and research whether the requester has a legitimate reason to ask for this form.

Financial institutions sometimes use Form W-9 to request information from a customer when they need to report dividends or interest. Another situation in which you should hesitate before filling out Form W-9 is if the company asking you to do so is your employer and you are supposed to be classified as an employee, not an independent contractor.

The difference is substantial. If you're an employee, your employer will withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on your wages.

If you're an independent contractor, it won't. That means you'll be responsible for the employer's share of Social Security and Medicare taxes, and that you won't be eligible for unemployment compensation if you are laid off. An unscrupulous or financially struggling employer might try to classify an employee as an independent contractor to save money. If you're classified as an independent contractor, your employer's tax "savings" will come out of your pocket as self-employment tax.

You'll also become responsible for calculating and paying your estimated taxes four times a year and filling out Schedule C when you file your annual tax return.

It isn't always clear whether a worker is an employee or independent contractor, but in general, the more control the business has over what workers do and how they do it, the more likely it is that they are employees. If your Spidey sense starts tingling when someone who hired you calls you an independent contractor, that's a good sign, and you should investigate the situation further. Start by reviewing the IRS discussion of the difference between the two.

If you're an employee, you should fill out Form W-4 , not Form W Here's an example of when an employer could legitimately change your status from employee to independent contractor. You're a computer programmer, and you're required to come into the office from 9 a. The company provides your desk and your computer. Starting next month, you will be required to provide your computer. You will be able to work from home or whatever remote location you want, and you can complete the work during any hours you want, as long as your assignments are completed on schedule and you respond to work-related phone calls and emails on time.

Has the IRS sent you a letter telling you that you are subject to mandatory backup withholding? This might have happened if you didn't report all your interest and dividends on a previous tax return.