The IRS W9 Form Made Simple
March 21, 2010 by Taxcut Editor
Filed under Personal and Business Taxes
For those who are independent contractors, as well as for people that work for themselves, a W9 Form is wanted to report their Social Security Number or Business Tax Identification Number to their customers. This is a pretty cut and dry bit of paper when it comes to government forms. You may just need to provide your name, your address, as well as your Social Security Number (or your Employer Identification Number, for those that are contractors and are thus considered a separate business entity all their own).
Besides the above information, an IRS W9 Form will also ask whether or not you are subject to backup withholding. What's “backup withholding,” you may ask. Well, that's withholding at a fixed rate of 28 % on payments made to you or your business under certain circumstances. There are 2 common reasons for using backup withholding. 1 explanation is if your name and Social Security Number does not match the name and Social Security Number the IRS has on file for you. One more reason would be if you have outstanding tax debt. In this example the IRS would have informed you you are subject to mandatory backup withholding till the outstanding tax debt is completely paid for.
During the tax season of the year, contractors will be getting W9 forms to complete. Since in that time of the year, clients are preparing to send out their 1099 forms. The 1099 Form is used to report self-employment earnings.
Other places you may be getting a W9 from are brokers and finance institutions. They'd ask for a W9 if you may earn interest revenue, dividends, or trading stocks and other securities. As well as the usual places a few of the people may receive requests for the W9 form from more strange places such as owners and other people or companies. This is exploited to ask, officially, from a person or business their name, address, and taxpayer identification number for the requesting party to correctly issue tax documents to the IRS.
As a rule, any kind of business that requests a W9 Form is one that pays you interest, generally, the sorts of businesses that request Form W-9 is any business that pays you reportable revenue. However if you happen to feel that you have received this form from a weird source you must ask them why they are requesting the form and what they are going to be using it for.
What about foreign subcontractors? With foreign sub-contractors A W9 isn't needed, it's just needed to gather information from US folks and businesses. However if you have a foreign contractor that's working for you, they will very probably be needed to fill out one of the various W8 Forms.
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