What is the purpose of the W 9 form?

More In Forms and Instructions Use Form W-9 to provide your correct Taxpayer Identification Number (TIN) to the person who is required to file an information return with the IRS to report, for example: Income paid to you. Real estate transactions. Mortgage interest you paid.

Who needs to fill out a W9?

Those who should fill out a W 9 are those who are working as independent contractors or freelancers, because the W-9 is the form used by the IRS to help gather information about such workers. The W-9 form is an informational reporting tax form, meaning that it provides information to the IRS about taxable entities.

Is a W9 a 1099?

W-9s and 1099s are tax forms that businesses need when working with independent contractors. Form W-9 is what an independent contractor fills out and provides to the employer. Form 1099 has details on the wages an employer pays to an independent contractor.

Is W-9 required by law?

By law, you are only obligated to provide a W-9 to parties that intend to pay you interest, dividends, non-employee compensation, or any other type of reportable income. If someone unexpected asks for a W-9, ask them why they need it.

Why would a customer request a W9?

Why is my customer asking for a W-9 form? Companies that make payments in the normal course of their business are required to report certain payments to both the IRS and to the person or entity paid at the end of each calendar year. This is typically done using Form 1099.

How much taxes will I pay on a W9?

If your income from a W-9 arrangement is subject to backup withholding, the current flat rate set by the IRS is 28\%. So, to calculate how much you can expect to be withheld, simply multiply your W-9 income by 0.28.

Do independent contractors need W9?

W-9 forms are for self-employed workers like freelancers, independent contractors and consultants. You need to use it if you have earned over $600 in that year without being hired as an employee. If your employer sends you a W-9 instead of a W-4, the company has likely classified you as an independent contractor.

What is the difference between a 1099 and a W9?

Is a W9 form bad?

You should be fine. Here’s why. A form W-9 is used to provide your taxpayer identification number (such as your Social Security Number (SSN) or your Employer Identification Number (EIN)) to certain payers. The only party that should have that form W-9 would be the company (or the company’s tax professional).

Is W9 required?

You have a responsibility to obtain the W-9 from the contractor and retain a copy of it; however, it’s not necessary to send it to the IRS. It’s only necessary to issue a 1099 if you pay the independent contractor $600 or more during the tax year. If you do, you must send the 1099 to the IRS as well.