W-9 Form: What Is It?
A W-9 form is used for tax filing purposes. This form is used to get information from a person who you may be hiring or an independent contractor you are planning on using. The W-9, or Request for Taxpayer Identification Number and Certification form, will provide the employer with personal information such as the employees name, address, social security number, and more.
The information on this form will be kept by the employer. It does not need to be sent in to the IRS. The information on the W-9 will be used later in order to fill out other tax filing forms, such as a W-2 or a 1099.
The W-9 form is an important tool for employers to gather information about independent contractors or other employees. Verifying the information on this form and keeping it up to date will ensure you have the correct personal information on file when comes time to file taxes and send out other tax forms.
Why you need a W-9 Form
It is a popular myth that independent contractors and freelancers are just that – free. That self-employment somehow erases the drudgery of filing taxes and watching one’s income shrink. However, this could not be less true. An independent contractor has just as much tax rigmarole to deal with as an employee. The process of reporting freelance income is different than that of reporting employee income, but it’s a still a process. This article is addresses the first step of this process, the first form of independent contractor payment relationships – the W-9.
Here’s a run-down of how it works for both independent contractor and employer:
IF YOU’RE AN INDEPENDENT CONTRACTOR –
- Your employer will ask you to fill out and return a W-9 form. On it, you will need to provide your full legal name, address, and Taxpayer ID number. Be sure that double-check all your information; you can even check permanent information against last year’s returns or other official documents to be sure all details are consistent. One very important note: be sure that you submit the finished W-9 to your EMPLOYER – NOT the IRS.
- If you earn over $600 with an employer during the tax year, he or she will use the W-9 information to fill out a 1099. The 1099 is essentially a simplified W-2 that only reports gross income, but. You will need this form to file your own taxes, so don’t be afraid to (politely) pester your employer for a copy if need be/
- If you earn under $600 during the tax year, you won’t need a 1099. However, you will still have to fill out a W-9, and also report your income. No sum is too small for the hunger of the Self-Employment Tax!
IF YOU’RE AN EMPLOYER-
- Have each independent contractor you take on fill out a W-9. This should be done as early as possible, ideally during the time of hire. If a contractor is taking forever to get the w9 form back, don’t be shy about nagging. The IRS tends to be suspicious of independent contractors, so lag-time can potentially mark your company for an audit. And everyone knows how much fun that is.
- If you’ve hired someone new to independent contracting, be sure that you hammer it home that they need to give you the W-9 Form. not the IRS. You’d be surprised how many newcomers mess this up.
- If a contractor earns more than $600 from you during the tax year, you’ll need to report his or her income using a 1099 form. You can download one of these from the IRS website and fill out the 1099 using the information provided in the W-9.
- Submit one copy of the 1099 to the IRS and one copy to the contractor. Be sure not to forget about the contractor’s copy – he or she will need that form during tax season!