W-9 for Independent Contractors - An Overview
Updated on December 20, 2023 - 10:30 AM by Admin, TaxBandits
If you work as an independent contractor or freelancer, you've probably had to
fill out Form W-9, which is different from Form W-4, which employees fill out. This form helps businesses receive essential information from their contractors to prepare information returns for the IRS.
Read this article to understand the W-9, how independent contractors can fill out a W-9, and more.
Table of Contents:
1. What is Form W-9 for Contractors?
Typically, the W-9 form (Request for Taxpayer Identification Number and Certification) requests personal data, including your name, postal address, and taxpayer ID, as its name suggests.
When engaged as an independent contractor, freelancer, gig worker, or self-employed individual expecting income such as interest or dividends, a business may request you to complete and submit a W-9 form. This helps the business accurately fill out a 1099 form, ensuring they report your payments correctly for the year. Additionally, it helps determine whether you are subject to backup withholding.
Therefore, if you recruit independent contractors for your business, you should request a completed W-9 form from these individuals.
2. When is Form W-9 Required for Contractors?
Generally, you are required to provide a W-9 to any payer that made reportable payments to you, including:
- Specific real estate transactions
- Interest paid on a mortgage
- Acquisition or abandonment of secured property
- Cancellation of debt
- Contributions to an individual retirement arrangement (IRA)
As an independent contractor, it's essential to furnish a W-9 to any business that has engaged your services. This allows them to accurately report the payments they've made to you by filing a 1099.
Form 1099 vs W9: What's the difference?
Form W-9 and 1099 are crucial tax documents for independent contractors. Typically, the W-9 form collects tax information from independent contractors, while the 1099 forms report various types of
income to the IRS.
To learn more about Form 1099 vs. W9 - click here.
3. How do you complete Form W-9?
Filling out Form W-9 for federal tax purposes is a straightforward process.
Here are the instructions to complete Form W-9 for contractors:
Line 1 (Name)
Enter your name as shown on your tax return.
Line 2 (Business Name)
Enter your business name or "disregarded entity" name if it differs from the name you provided in Line 1.
Line 3 (Federal Tax Classification)
For federal tax classification, define what kind of business organization you are: a limited liability company, a partnership, a C or S corporation, a trust or estate, or others. Check only one box on line 3.
Line 4 (Exemptions)
If you are exempt from backup withholding or FATCA reporting, please indicate which code (s) applies to you on line 4.
Lines 5 & 6 (Address)
Enter your address, including number, street, apartment or suite number, city, state, and zip code.
Line 7 (Account Number)
This is an optional field. You can list your account number if required.
Part I (Taxpayer Identification Number):
In this section, you must enter your TIN, which can be either your Social Security Number (SSN) or your Employer Identification Number (EIN). Please note that the TIN you provide here must match with the IRS database.
|If you are…
|A sole proprietor (or) an individual (or) a single member LLC
|A Corporation (or) a Partnership (or) Multi-member LLC (or) a Trust/Estate
Part II (Certification)
The last part of the Form W-9 is certification, which requires you to acknowledge certain things:
- You provided the correct Taxpayer Information Number(TIN)
- You are not subject to Backup Withholding
- You are a U.S. citizen
The FATCA code(s) (if any) entered on this form to indicate that you are exempt from FATCA
reporting is correct
You can sign the IRS Form W-9 once you've reviewed it and confirmed that all the information is accurate.
4. How Does TaxBandits Simplify the W-9 Process for Independent Contractors?
TaxBandits, the leading IRS-authorized e-file provider, offers a straightforward method that simplifies completing a W-9 Form. The fillable W-9 solution from TaxBandits allows you to efficiently complete and send a W-9 to your payers. Additionally, if you need to request W-9 online from the contractors who work for your business, you can use our Form W-9 Manager to request W-9 online and manage them securely in one place.