What Is A W9 Form? W9 form must be filled and submitted by independent contractors or freelancers to provide their taxpayer identification number and certification with their name, address, business name, and type. It is an essential and widely used tax document, and one should take great care while filling it. A W9 form is necessary to be updated every time any of the details mentioned above are changed. A W9 form is essential whenever the business pays the contractor during the tax year for $600 and more. Whenever any business attains this point, they have to report their payments to the internal revenue service and fill in the form1099-MISC, which gathers all the required information to update the W9 form. Usually, the person who hires the independent contractors is the ones who request the person to fill the W9 form. These higher officials will help the person fill out the paperwork to submit their tax return.
What Are The Information Required For the W9 Form?
One must mention certain mandatory information, and one such important aspect is if the contractor has backup withholding. The business or the person who hires the contractor will have to withhold an income tax from the payment at a rate of 24%, and the amount deducted will be directly sent to the internal revenue system. Therefore, a W9 record needs the following detail from either a freelancer or an independent contractor which are:
- Name of the Contractor
- Postal address of the contractor
- Type of business entity which may be either partnership, sole proprietorship, limited company, etc.
- Tax identification number
- Official business name
What Are The Sole Benefits Of the W9 form?
A W9 form is only for independent contractors, unlike the employees who do not withhold income tax, medical care payments, or other taxes associated with social security. These people are purely self-responsible for their obligations. Hence a W9 form helps in:
- Analyzing if the person is an employee or an independent contractor. An employee will be entitled to another form known as the W4 form.
- A W9 form collects all the information and details to fill the 1099 form.
- Besides tax, it has a client for real estate transactions, dividends against investments, financial transactions, and income for accounts payable as part of a contract.
- W9 form certifies that the person has backup withholdings.
- It files all the information of returns with the internal revenue service to report the income, mortgage interest that one has paid, abandonment of secured property, cancellation of debt, and other financial contributions for various reasons to other concerns.
Besides higher officials, a bank or a brokerage firm can also request any individual to fill up the W9 form at any time. W9 forms are to be submitted in the proper form and only if the request is legit as there are various scams in collecting all these details with a highly sophisticated mail or message. It is also highly advisable to hand off the filled W9 form in person to the official authority or send through email securely to the requester to be safe while sharing all the personal and financial details. Penalty charges also apply when the individual delays or crosses the assigned deadline to fill up the W9 form.