Key Takeaways

  • IRS Form W-9 is used to collect taxpayer identification information from non-employees such as independent contractors and freelancers.

  • W-9s are not required for all types of payments or payees—certain exceptions apply.

  • You must file a W-9 if you're an independent contractor or vendor earning $600 or more from a business in a year.

  • Situations like paying corporations (in many cases), foreign vendors, or exempt organizations may not require a W-9.

  • If a contractor refuses to provide a W-9, the payer may need to withhold taxes at a backup withholding rate.

Do I need to fill out a W 9? Many individuals that work as an independent contractor or freelance professional have this question. Filling out a W-9 provides the company with your social security number so they can report your earnings to the IRS.

What is IRS Form W-9?

The IRS Form W-9 is most often used by those working as an independent contractor or freelance professional. A W-9 is not used for full-time employees. A full-time employee of a company is subject to withheld taxes to pay for benefits including Medicare, unemployment taxes, and Social Security. Because employers do not withhold these taxes for independent contracts, a W-9 form is necessary. A traditional W-9 includes the following information:

  • Identification information: This includes name, address, and tax ID number.
  • Agreement: The W-9 is essentially an agreement between the contractor and the employer that it is the contractor's responsibility to pay their own taxes. The W-9 is a document between the contractor and the employee and is never sent to the IRS for tax filing.
  • Income information: The business will fill out a 1099-MISC to list all payments made to the contractor. The W9serves as a form for filing taxes as an independent contractor.
  • Importance of accurate information: It is important that the information on the W-9 is accurate. Utilizing the services of a tax accountant is helpful for drafting and completing complicated W-9 documents.

Independent Contractors vs. Employees

Sometimes there are questions as to what separates an independent contractor from an employee. Sometimes the specific responsibilities and roles of each type are similar. These are the most important distinguishing characteristics:

  • Independent contractors have more control over the timeline and completion of their expected tasks.
  • Independent contractors do not receive benefits such as health insurance or 401(K).
  • Independent contractors are able to claim additional deductions such as home offices, mileage, and other expenses required to do business.

Who Needs to Fill Out an IRS Tax Form W-9?

Any employee that is not considered an actual employee of the business should fill out a W-9 form. These are often employees that are not needed in the business full-time because the requested work is temporary. The following types of independent contractors are often required to fill out a W-9:

  • Freelancers: This can include writers, researchers, and graphic designers.
  • Consultants: These are experts brought into a business to offer advice on finances, budgets, public relations, and personnel training.
  • Custodians or cleaning professionals
  • Landscaping professionals
  • Repair workers

Even contractors that work with a company for a long period of time require a W-9 form. There are other situations that might require a W-9 that do not include an employment basis:

  • Real estate transactions
  • Paid mortgage interest
  • Acquisition of an abandoned property
  • Canceled Debt
  • Contributions to an IRA

These are all examples of situations that the IRS views as earned income and thus, the person is subject to paying taxes on the income.

When Is a W-9 Not Required?

While IRS Form W-9 is commonly requested for payments to independent contractors, there are clear instances when a W-9 is not required. These exceptions typically relate to the type of payee or nature of the payment. Understanding these can help businesses avoid unnecessary paperwork and stay in compliance.

You do not need to request a W-9 form in the following situations:

  • Payments made to corporations – Generally, corporations are exempt from receiving Form 1099 and therefore do not need to provide a W-9, except in specific industries (like legal or medical services).
  • Payments to tax-exempt organizations – Nonprofits with 501(c)(3) status are not subject to 1099 reporting and don't need to submit a W-9.
  • Payments to government agencies – Federal, state, and local government entities are exempt.
  • Foreign vendors or nonresident aliens – These individuals or entities typically use Form W-8 instead of W-9.
  • Payments for merchandise, freight, storage, and similar – If the payment is not for services, a W-9 is not required.
  • Employee wages – If the person is on payroll and issued a W-2, they do not need to complete a W-9.

Understanding when a W-9 is not required ensures smoother operations and helps avoid requesting unnecessary forms from exempt individuals or entities.

Receiving the Form 1099

It is possible that you will receive a W-9 at some point in your career. It is also possible that you may issue a W-9. If you fill out a W-9, you can expect to receive a 1099 with your reported income. The 1099 is an important document needed to file your income taxes at the end of the business year. It is important to include all income earned on the 1099 to prevent any additional taxes or penalties.

Returning a W-9

If you receive a W-9, it is important to fill it out as soon as possible. You will then return it to the person that requested it. You can mail the form or send it via E-mail. You will want to keep confidentiality in mind in whichever method you choose to return the W-9.

What Happens If a Contractor Refuses to Provide a W-9?

If a contractor refuses to complete a W-9, businesses still have an obligation to report the payments to the IRS. In such cases, the payer is required to initiate backup withholding, meaning they must withhold 24% of the payment and remit it to the IRS.

To comply with IRS regulations:

  • Attempt to obtain the completed W-9 before making payment.
  • If the contractor does not respond after repeated requests, notify them that backup withholding will be applied.
  • Keep documentation of your efforts to obtain the form in case of an audit.

Not receiving a W-9 does not relieve the payer from the duty to report payments or withhold taxes properly.

Requesting a W-9

If you are the one paying independent contractors, it is your responsibility to issue the W-9 if you pay $600 or more to your contractor. When it is time to send 1099s to your independent contractors, you will need the information on the completed W-9 form. You must also send the 1099 to the IRS to report the payments.

Tips for Requesting W-9s Efficiently

To maintain compliance and streamline year-end tax reporting, businesses should implement best practices for collecting W-9 forms:

  • Collect early: Request the W-9 form before the first payment is made to a vendor or contractor.
  • Automate requests: Use digital tools or accounting software to send W-9 requests and track submissions.
  • Keep records secure: Since W-9 forms contain sensitive personal information, store them in secure, encrypted systems.
  • Verify information: Ensure the name, business classification, and TIN/SSN match IRS records. The IRS may issue a "B Notice" if mismatches occur.

By proactively requesting W-9s and verifying details, businesses reduce the risk of filing errors and IRS penalties.

Frequently Asked Questions

When is a W-9 not required?

 A W-9 is not required for corporations (in many cases), government entities, nonprofits, foreign vendors, and payments for goods instead of services.

Do I need to fill out a W-9 if I’m a freelancer?

Yes, if you are being paid $600 or more by a client during the tax year, you should fill out a W-9.

Can a business be penalized for not collecting a W-9?

Yes. Failure to collect a W-9 when required can lead to IRS penalties and mandatory backup withholding.

What happens if the W-9 has incorrect information?

The IRS may issue a “B Notice” if the Taxpayer Identification Number (TIN) doesn’t match IRS records. This can result in backup withholding and additional compliance burdens.

Should I send the W-9 form to the IRS?

 No. The W-9 is not submitted to the IRS. It is kept on file by the business or entity that requested it, to prepare the 1099-NEC or other appropriate forms.

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