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. In line 5, enter your address. If you discover that the requester has been using the wrong address or TIN for your business, let the requester know as soon as possible and provide the correct information.
Line 7 is optional. Some businesses have multiple accounts with a vendor and this line is available to specify which account this W-9 pertains to. Requestors of Form W-9 will have to deduct backup withholding from any payments that are subject to it until you provide your TIN. This is where you sign when required. You are responsible for ensuring the right amount of taxes are paid to the IRS. It can be a little confusing to differentiate whether you should fill out Form W-9 or Form W-4 based on the actual work performed.
A better gauge is the circumstances around the working relationship. Generally, the more control an employer exerts over what a worker does and how they do it, the more likely that person is an employee and not an independent contractor.
Another quick way to tell is to determine whether the business aspects of the relationship are controlled by the payer.
That includes how the worker is paid, whether expenses are reimbursed, which party provides tools, supplies, etc. If the employer controls those details, the worker is more likely an employee. If employee benefits are offered, like pension plans, paid vacation, and matching k contributions, the worker is probably an employee.
Sometimes an employer might try to save money by classifying an employee as an independent contractor. Here are a few things to look out for:. Take Control of Your Finances Sign up to get the latest tax tips, information on personal finance and other key resources sent straight to your email. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content.
Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. 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. Learn more about the W-9 form meaning, examples of W-9 income, and other terms associated with this form here. The form, officially called Form W-9, Request for Taxpayer Identification Number and Certification, is typically used when a person or entity is required to report certain types of income. The form helps businesses obtain important information from payees to prepare information returns for the IRS.
Taxpayers use the W-9 tax form to verify their correct taxpayer identification number TIN and to certify that they are not subject to backup withholding. Examples of the types of income include:. When you hear that you need to fill out a W-9, you might think it will be a complicated tax form.
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