Understanding Form W-9, Request
for TIN

Updated on January 12, 2024 - 10:30 AM by Admin, TaxBandits

The objective of the W-9 form is resident from its title, Request for Taxpayer Identification Number and Certification - it is used to collect vital information from independent contractors.

This article explains what a W-9 Form is, what information is needed, who may fill it out, how to complete and submit a completed W-9 Form, and why a W-9 is essential.

1. What is Form W-9?

A W-9 is an IRS form that you can use to share your Taxpayer Identification Number (TIN) with your payer or whoever is in charge of filling out a 1099 for you.

Your payer will use the information you provide on your W-9 to file 1099 Forms to report the payments they
made to you.


2. Who should complete Form W-9?

Generally, a Form W-9 is used by individuals or entities who work as independent contractors, freelancers, consultants, etc. If you fall into one of these classifications and the business you work for pays you at least $600 annually, they will require you to complete and submit Form W-9.


3. When does a business ask you for Form W-9?

Before beginning an assignment, the business paying you asks you to complete a Form W-9, mainly at the time of
your onboarding.

Also, some businesses may require you to provide your W-9 just before they start preparing 1099s for you, this takes place at the end of the year.


4. What Information is Needed on Form W-9?

Filling out a Form W-9 is quite simple. The primary information that businesses will require from you on Form W-9 is your Tax Identification Number (TIN). Here is an overview of all the information captured on Form W-9:

  • Name & Address: You can use the same name as on your tax return or provide your business's name. If you have a DBA name, you may also provide it. After that, provide your address.
  • Federal Tax Classification: For federal tax classification, check the appropriate box and specify what kind of business entity you are. If your business is an LLC, you can check the appropriate box according to how your LLC is treated.

If your business is registered as an LLC, you may check the appropriate box based on how your business is treated for federal tax purposes.

Example:

  • You must check the box for "Individual/sole proprietor or single-member LLC" if your LLC is a Disregarded entity.
  • You must check the "Limited liability company" box and provide the appropriate classification to specify whether your LLC is classified as a corporation or partnership. (C=C corporation, S=S corporation, P=Partnership).

For detailed information on filling out a W-9 for LLC, click here.

  • Taxpayer Identification Number: In this section, you will enter your Taxpayer Identification Number (TIN). You can provide your Social Security Number (SSN) if you are an individual. You can enter your Employer Identification Number if you have a registered business.
  • Exemptions: If you are exempt from Backup withholding or FATCA reporting, insert the required code in the appropriate field.

5. What is Backup Withholding?

Under certain circumstances, businesses (payers) that provide you with certain payments must withhold and pay 24% of those payments to the IRS. The term for this is "backup withholding." If you provide the requester with your accurate TIN, complete the required certifications, and declare all your taxable interest and dividends on your tax return, you will avoid backup withholding on receiving payments.

Generally, you will be subjected to backup withholding of payments if:

  • You either do not submit your TIN or offer an inaccurate TIN
  • The IRS tells the payer to withhold taxes because you have a history of underreporting your income on your
    tax return.
  • You need to attest that backup withholding does not apply to you.

6. What is FATCA Reporting?

All US account holders who meet specific US citizen requirements must be reported by a participating foreign financial institution following the Foreign Account Tax Compliance Act (FATCA).

While filing the Form W-9, if you’re exempt from FATCA reporting, you can enter the exempt code in the appropriate space on Line 4. These codes apply to persons submitting this form for accounts maintained outside the United States by certain foreign financial institutions.


7. What happens if you fail to provide a Form W-9 for 2023?

As mentioned earlier, if you are required to provide a Form W-9 and fail to do so, the payer may be required to withhold taxes from your payments at a backup withholding rate. To avoid this, providing accurate information on the Form W-9 your payer requests is crucial. If there are changes to the information (such as a change in name, address, or TIN), it's essential to update the Form W-9 promptly.

In addition to backup withholding, failure to furnish a correct TIN to your payers can result in a penalty starting
from $50.


8. When to Submit Form W-9: Common Scenarios

Here are a few common scenarios to help you better understand when to submit a W-9, and when you don’t need to.

I’m a Freelancer. I don’t have a registered business. Should I still submit
a W-9?

Yes! If the business you work for pays you $600 or more in a year, they will need to report the payments by filing a 1099-NEC to the IRS. For that, they will need you to submit your completed W-9 Form. You can provide your SSN in your W-9 Form.

I work as an employee as well as an independent contractor for two different businesses. Do I need to provide my W-9 for both businesses?

Not exactly. Typically, the business you work for as an employee does not need you to submit a W-9 instead you will be filling out Form W-4.

However, the business that hired you as an independent contractor will require you to complete and submit Form W-9, since they will be filing 1099s for you.


9. TaxBandits Simplifies the Form W-9 Process

Filling out Form W-9 and sharing it with your payers can be challenging. Our simple approach makes filling out a W-9 easier than ever.

TaxBandits’ fillable W-9 solution is designed to help you complete and submit a W-9 to your payers quickly and easily!

Form W9 Manager

Businesses needing a solution for requesting and collecting W-9 Forms from their independent contractors can use our
Form W-9 Manager.

Request that your Vendors Complete, E-sign, and
Submit their W-9 Online