The IRS Form W-9: Request for Taxpayer Identification Number and Certification

Any entity with at least one employee must possess an Employer Identification Number (EIN). When filing a Form W-9, they must use the EIN section in Part I instead of the SSN section. A W-9 form is not required if the receiving entity makes less than $600 during the fiscal year. Some vendors may still ask you to fill out a W-9 anyway because you could potentially make more than $600 with them.

What Is a W-9 Form, and When Do I Need One?

If you’re a sole proprietor, enter your Social Security number in Part I even if you have an EIN. The U.S. person signing a W-9 on behalf of a nonprofit must either be the owner or have the organization’s consent to sign the form. The IRS treats single-member limited-liability corporations (SMLLCs) as disregarded entities unless the owner has applied for it to be treated as a corporation or a partnership. While a W-9 looks straightforward, there are many instructions and sometimes unclear questions. When filling out a W-9, ensure you aren’t misreading a question, answering incorrectly, or skipping important sections.

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Its primary purpose is to confirm the identity (e.g., full name, address, taxpayer identification details) of a person receiving income from another person (the requesting entity). This form can be used to request the correct name and Taxpayer Identification Number, or TIN, of the payee. The W-9 should be kept in your files for four years for future reference in case of any questions from the worker or the IRS. Cleer Tax provides flat-rate accounting services for U.S. startups, often with foreign ownership, and growing businesses, to do it right from the start. Our all-inclusive accounting packages provide tax preparation, and bookkeeping to fit any budget and growth stage.

How to Fill Out Form W-9

Information Returns can be filed electronically, however, you must have software that can produce the file in the proper format as required by Publication 1220. Beginning with Tax Year 2020, you must use Form 1099-NEC, Nonemployee Compensation, to report payments of nonemployee compensation (NEC) previously reported in box 7 on Form 1099-MISC. The separate instructions for filers/issuers for Form 1099-NEC are available in the Instructions for Forms Grocery Store Accounting 1099-MISC and 1099-NEC PDF. Deliberately including false information on a W-9 could result in civil or criminal penalties.

• This type of information can lead to identity theft and should be protected as such.
• Churches must also use Form 1099s to record their business transactions.
• Businesses withhold federal and state income taxes, Social Security taxes, and Medicare taxes for their employees and pay the taxes on their behalf.
• Digital copies of the W-9 form are available on the IRS website.
• If the requester discloses or uses TINs violating federal law, the requester may be subject to civil and criminal penalties.
• If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

In other words, in almost every case you will enter your personal Social Security Number, not the EIN of the LLC. Individuals making donations to charitable organizations do not need to fill out a W-9 form. Some donations may be tax deductible and covered by other forms, depending on the type and amounts donated. Because a W-9 is an official government form that carries fines or penalties if incorrectly filled out or lost, there are a few tips and considerations to consider when preparing one for a contractor. The IRS requires all corporations and partnerships to apply for an Employer Identification Number.

Why am I being asked to complete a Form W-9?

Like freelance platforms, to sign up with gig companies, you must fill out a W-9. Payers use Form 1099-NEC to report payments made cash flow in the course of a trade or business to others for services. Discover what’s deductible for your business and how to save more when it’s time to file. If your small business is collecting W-9s, you should make sure to send them well before the 1099 deadline.

• LLCs should expect to have to fill out W-9s over the course of their business.
• To obtain tax information from outside sources, businesses use IRS Form W-9.
• This designation sounds complicated but it just applies to single-member LLCs.
• Governments do not have the right to tax each other as that would imply having power over the other.
• To be safe, some businesses will send out Form W-9 to every single one of their contractors to fill out ahead of time, even if they don’t expect them to perform $600 of work for them.

This information is used when completing your Form W-2 at the end of the year. Consider updating your W-4 with your employer yearly or when you have certain life changes like getting married, divorced, or having a child. Are you an independent contractor, freelancer, or business owner? If so, you may have received a W-9 form from a client or customer.

• Source Income of Foreign Persons, must be filed if the payer is required to file Form 1042-S.
• If you cannot determine whether the payee is a foreign person or a U.S. person, the presumption rules require you to treat the payee as a non-exempt U.S. person and deduct backup withholding.
• A sole proprietor business operates under the owner’s Social Security number and has not registered with the state as any other type of business.
• Payments made to these individuals may be subject to 30% withholding (nonresident alien withholding rate) unless a lower rate is provided by tax treaty or the law.
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• False statements with no reasonable basis can also result in the IRS issuing a $500 fine.
• If you need one, check out the IRS’s online application form for the EIN.

The account number(s) section only applies if you need to send account information (like a brokerage account) to the recipient of form W-9. If you’re unsure, it’s best to reach out to whoever requested the form W-9 from you. Learn how to build, read, and use financial statements for your business so you can make more informed decisions. Not sure where to start or which accounting service fedex w-9 fits your needs?

If you can’t get a straight answer, talk to a tax professional. Remember that the only reason anyone would ever need a W-9 from you is because they need it to send you some kind of IRS form. To learn more about who is subject to backup withholding, check out this IRS page. If a contractor is subject to backup withholding, they’ll have to indicate that on their W-9.