All About Form W9: What It Is And How To File It

Whether you’re a freelancer or a small business owner, running a business means navigating complicated paperwork. Accurate and timely tax compliance is critical to smooth operations. Independent contractors and businesses paying non-employee compensation should understand the reporting requirements. 

IRS Form W-9 is an informational form for recipients of numerous types of income, including non-employee wages. Payers and recipients of non-wage compensation should understand the Form W-9 requirements.

This article will explain the purpose of Form W-9 and help you determine whether you need to file the form. We’ll also include a step-by-step guide for filling out your Form W-9. 

What Is the W-9 Tax Form?

IRS Form W-9, Request for Taxpayer Identification Number and Certification, is an information return. Form W-9 provides information about U.S. persons and resident aliens who receive non-employee payments. Common recipients include freelancers and independent contractors. Form W-9 lists the payee’s name, entity type, federal tax classification, address, and tax identification number. 

Payers must request a Form W-9 from each payee and submit completed forms to the Internal Revenue Service (IRS). 

What Is the Purpose of a W-9?

The W-9 filing requirement helps the IRS track non-wage compensation earners and their taxable income. The IRS can trace taxpayer identification numbers from Form W-9 to 1099 forms and federal income tax returns. The agency can use the reports to assess tax return accuracy.

We’ll discuss the 1099 filing requirements in further detail later. 

Form W-9 vs Form W-2 or Form W-4

Employers must file numerous tax documents. Accurate tax compliance requires understanding the differences between each form.

IRS Form W-9 reports information about recipients of non-employee payments. In contrast, IRS Form W-2, Wage and Tax Statement, and IRS Form W-4, Employee’s Withholding Certificate, represent employment tax forms. Businesses that hire employees and withhold employee income taxes must file Form W-2 and Form W-4 for each employee:

• IRS Form W-2 reports employee wages and tax withholding. Employers must submit W-2 forms to the IRS and distribute employee copies annually before January 31st. Employers should file a Form W-2 for each employee. 

• IRS Form W-4 reports employee filing status and withholding elections. Form W-4 helps employers withhold the correct amount of payroll taxes. Employers should collect a Form W-4 from each new employee. 

Professional CPAs can help you determine which tax forms your business should file.

Who Should File Form W-9?

Individuals and businesses paying non-employee compensation must report the payments to the IRS. The payers must file Form W-9 for each recipient. 

Payers must also file 1099 forms to report the payments to the IRS. Form W-9 reports information about each payee, and Form 1099 reports the payment amounts. 

Generally, each payer must request a Form W-9 from each 1099 recipient. The IRS website at IRS.gov provides instructions for Form W-9 requesters.

Numerous types of payments create a Form 1099 filing requirement. Consider the following list of common 1099 forms and associated income types. If you receive the following reportable payments, you should submit a Form W-9 to each business paying you.

• Form 1099-C, Cancellation of Debt 
  
• Form 1099-DIV, Dividends and Distributions
  
• Form 1099-INT, Interest Income
  
• Form 1099-MISC, Miscellaneous Information
  
• Form 1099-NEC, Nonemployee Compensation
  
• Form 1099-S, Proceeds from Real Estate Transactions
  
• Form 1098, Mortgage Interest Statement

Only U.S. companies and individuals should submit Form W-9. Non-U.S. citizens may have different compliance requirements. 

Small businesses must follow complex rules for payments to independent contractors. Whether you’re an employer or freelancer, online bookkeeping and accounting services can help you save time and money. Professional CPAs track due dates and filing requirements so you can stay compliant while growing your business.

How to Fill out Your IRS Form W-9

If you receive reportable payments, follow our step-by-step guide to complete Form W-9. 

W-9 Recipient Information

The topmost portion of Form W-9 collects the recipient’s information.

• Line 1: Enter your legal name. This entry should match your federal income tax return.
  
• Line 2: Enter your business or disregarded entity name. Most sole proprietors who haven’t set up a limited liability company (LLC) should skip Line 2.
  
• Line 3a: Check the appropriate box to indicate your business entity type for tax purposes. Choose one of the following:
  
  
  • Individual/sole proprietor or single-member limited liability company (LLC)
    
  • C corporation
    
  • S corporation
    
  • Partnership
    
  • Trust/estate

• Line 3b: Check the box if you are a partnership or trust/estate with foreign partners, owners, or beneficiaries. Line 3b is a new question to help businesses comply with reporting requirements about foreign owners.
  
• Line 4: List exemptions from backup withholding or Foreign Account Tax Compliance Act (FATCA) reporting.
  
  • Backup withholding represents mandatory withholding by the payor due to incorrect or insufficient reporting by the payee. We’ll explain more about backup withholding later.
    
  • FATCA reporting applies to recipients with accounts in foreign financial institutions. We recommend consulting tax professionals if this applies to you.
    
• Line 5 and Line 6: Enter your mailing address. You may optionally enter the name and address of the party requesting your W-9.

Need extra help? Tax professionals offer personalized guidance.

Form W-9 Part I. Taxpayer Identification Number (TIN)

Your TIN represents one of the following identifiers: 

• Social Security number (SSN): Most individual recipients enter their SSNs. This includes owners of sole proprietorships and single-member LLCs. If you’re unsure whether this applies to you, consult tax professionals for help.
  
• Individual taxpayer identification number (ITIN): Resident aliens who cannot obtain an SSN may enter their ITINs. (To apply for an ITIN, use IRS Form W-7, Application for IRS Individual Taxpayer Identification Number.)
  
• Employer identification number (EIN): Corporations, partnerships, trusts, and estates must enter their EINs. To obtain an EIN, use IRS Form SS-4, Application for Employer Identification Number (EIN), or apply for an EIN online.
  
• Adoption taxpayer identification number (ATIN) (uncommon): Adopted children may have an ATIN in limited circumstances. 

Form W-9 Part II. Certification

Most individuals and entities should sign Form W-9 Part II. 

However, some recipients do not need to sign and may skip the certification. According to the Form W-9 instructions, recipients of certain types of income may opt out of certification. For example, recipients of mortgage interest, cancellation of debt, or contributions to individual retirement arrangements (IRAs) do not need to sign.

Review the instructions to determine whether you should sign Part II. Professional tax preparers can support you with filling out Form W-9.

Where and When to File Your W-9 Tax Form

Return your completed Form W-9 to the requestor. If you provide freelance services to a business, your client should tell you where to send the form. 

The Form W-9 instructions lack a due date, but recipients must honor deadlines from requestors. Businesses need correct TINs early each tax year so they can meet the Form 1099 deadline. 

Additionally, business owners must collect and submit W-9 tax forms to the IRS. If your business files numerous W-9 and 1099 forms, consider outsourcing your tax compliance to professional CPAs. 

What Happens If You Don’t File Form W-9?

The IRS imposes penalties for failing to provide accurate taxpayer information. If you forget to submit your W-9 or accidentally give an incorrect TIN, you could receive fines of $50-$500 for each mistake. Taxpayers who purposely enter inaccurate information could suffer criminal fines and penalties. 

Additionally, the IRS can subject taxpayers to backup withholding for inaccurate reporting. 

What Is Backup Withholding?

If the IRS subjects a taxpayer to backup withholding, the payer must withhold 24% of all payments to the taxpayer. The payer submits backup withholding directly to the IRS. 

The IRS could impose backup withholding on taxpayers who fail to do the following:

• File Form W-9
  
• Provide a correct taxpayer identification number
  
• Sign Form W-9 (if required to certify)
  
• Report interest and dividends on their income tax return

The IRS exempts real estate transaction payments from backup withholding but subjects most other non-wage payments, including rent, non-employee compensation, and tax-exempt interest. 

Avoid backup withholding by partnering with income tax professionals on your tax form preparation.

Get Personalized Help with Your Small Business Tax Forms

Small businesses must comply with numerous reporting requirements and filing deadlines. Self-employed professionals deal with complex tax rules. Consider outsourcing your tax responsibilities and reclaim your time to develop your business.

1-800Accountant supports business owners and freelancers with year-round tax compliance and advisory services. 

Avoid interrupting your business growth with tedious paperwork or paying penalties on a form you overlooked. 1-800Accountant can help you maximize your deductions and lower your tax bill. Schedule a free consultation with 1-800Accountant to learn how you can benefit from professional bookkeeping, accounting, and tax services.