What is the W-9 form used for?

Form W-9 is a commonly used IRS form for providing necessary information to a person or company that will be making payments to another person or company. One of the most common situations is when someone works as an independent contractor for a business.

How do I fill out a w9 for an individual?

W-9 Form Instructions

1. Line 1 – Name.
2. Line 2 – Business name.
3. Line 3 – Federal tax classification.
4. Line 4 – Exemptions.
5. Lines 5 & 6 – Address, city, state, and ZIP code.
6. Line 7 – Account number(s)
7. Part I – Taxpayer Identification Number (TIN)
8. Part II – Certification.

Who is exempt from providing a w9?

To qualify as exempt for W-9 purposes, the payee must be one of the following: Any IRA, an organization exempt from tax per section 501(a), or a custodial account per section 403(b)(7) if said account meets the criteria of section 401(f)(2) Corporation. Financial institution.

What happens if I don’t fill out a W9?

If you don’t fill out a W-9 duly requested by an employer, partner or other entity duly entitled to your taxpayer ID information, you may be penalized $50 for each instance. You may also be subject to backup withholding, which means the payor will withhold 28 percent of your check and forward the proceeds to the IRS.

What happens if you don’t report a w9?

Can I refuse to fill out a w9?

Can I refuse to fill out the W-9? Yes, you can refuse a request to fill out the W-9 but only if you are suspicious as to why a business has made the request. Be wary of filling out the W-9 if the business does not have a legitimate reason to ask you to fill it out.

Why do banks need W9?

US financial institutions ask you to complete Form W9 in order to obtain your personal identifying information (name, address, tax ID) to report income paid to you to the IRS, such as interest, dividends, capital gains, cancellation of debt, royalties, rents, etc. or income paid by you to the institution, such as …

Who is required to fill out a w9?

W-9 forms are for self-employed workers like freelancers, independent contractors and consultants. You need to use it if you have earned over $600 in that year without being hired as an employee. If your employer sends you a W-9 instead of a W-4, the company has likely classified you as an independent contractor.

What is the exact purpose of a W-9 form?

Completing Form W-9. You can download the W-9 form from the IRS website.

Taxpayer identification number. After you complete the mailing address section,you’ll need to enter your taxpayer identification number,or TIN.

Backup withholding.

How do I fill out the W-9 form?

Print or type your name where it says “Name.” The name must match the name shown on your tax returns.

Check the box for “Individual/Sole proprietor” if you have not filed your taxes as a corporation,partnership or LLC.

Check the box for “Exempt payee” only if you are positive that you are exempt from backup withholding.

Why is Form W-9 so important?

Form W-9 is used to communicate to your client what information should be reflected on a Form 1099. The form is simple to complete but it is extremely important to fill it out with the correct information, so as to have your income reported correctly. If you are a sole proprietor you will fill out the W-9 with your social security number.

Does a W-9 form affect your income?

Form W-9 doesn’t usually result in income taxes withheld, but there is an exception. Image source: Flickr user Phillip Ingham.