The IRS W9 Form Unmasked
Posted on November 11, 2009For those that are independent contractors, as well as for those that work for themselves, a W9 Form is needed 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 simply need to provide your name, your address, as well as your Social Security Number (or your Employer Identification Number, for people that are contractors and are thus considered another business entity all of their own).
Besides the above info, an IRS W9 Form will also ask whether you are subject to backup withholding. What’s “backup withholding,” you may ask. Well, that’s withholding at a flat rate of twenty-eight percent on payments made to you or your business under certain circumstances. There are a couple of common reasons for using backup withholding. One explanation is if your name and Social Security Number doesn’t 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 that you’re subject to mandatory backup withholding until the outstanding tax debt is completely paid for.
During the tax season of the year, contractors will be getting W9 forms to complete. Since during that time of the year, clients are preparing to send out their 1099 forms. The 1099 Form is used to report self-employment income.
Other places you may be getting a W9 from are brokers and finance establishments. They would ask for a W9 if you’ll earn interest revenue, dividends, or trading stocks and other securities. As well as the common places a few of the people may receive requests for the W9 form from more peculiar places such as landlords and other folks or firms. This is utilized to ask, officially, from an individual or business their name, address, and taxpayer identification number in order for the asking for 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 kinds of enterprises 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 unusual source you should ask them why they are asking for the form and what they are going to be using it for.
What about foreign subcontractors? With foreign sub-contractors A W9 is not needed, it is only wanted to gather information from US people and businesses. However if you’ve a foreign contractor that’s working for you, they will most likely be required to fill out one of the varied W8 Forms.
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