1. Reporting Interest and Dividends
2. Filling a W-9
3. Freelancers and Contractors
4. Consultants

A W-9 corporation is not something individuals need to worry about unless they are:

  • Self-employed workers,
  • Consultants, or
  • Independent contractors.

The completion of an IRS W-9 form is usually done by individuals or businesses who have been engaged to provide services to another company. The company uses the information provided in the W-9 to prepare the Form 1099-MISC, which reports to the IRS how much money is paid to you or your business for services rendered.

Reporting Interest and Dividends

Banks and other financial institutions may ask you to complete a W-9 to enable them to prepare various kinds of 1099 forms that are used to report dividends and interest to the IRS, as well as other types of income earned. In some cases, you may be asked to fill a W-9 if you plan on opening an account.

On the other end, companies that engage independent consultants or contractors will also have to deal with the minutiae of a W-9. When working as a contractor, the business will provide you a blank W-9 to fill out. If you or your business have to issue form W-9 to contractors, you can visit the IRS website to download or print out the form.

Filling a W-9

Completing a Form W-9 is straightforward. All that is needed from an individual is a name and Social Security number. If the contracted entity is a business, the owner should provide the business name and employer identification number. Once you complete and submit a W-9, you officially state to the U.S. Internal Revenue Service that the tax ID number you provide is correct.

W-9s are standard tax documents and usually don't pose problems by themselves; however, there are a few situations that call for caution. One is if a person or entity that asks you to complete a W-9 form is unknown to you. You must exercise caution since a completed W-9 contains sensitive information about you such as name, address, employer identification number, or Social Security number. You should ask how they want to use the tax information you supplied.

Always send a completed W-9 securely. Do not send the form as an unencrypted or insecure email document. Use more secure methods of delivery such as:

  • Hand delivery,
  • Mail, or
  • Encrypted email attachment.

If you're unsure how the W-9 will be used, ask the requester for the types of tax documents that you will receive if the information is used.

You should also take care when commencing a new job if your employer gives you a W-9 to fill out instead of a W-4. Ask your boss if you were hired as an employee or for an independent contractor position. Employees fill out a Form W4 to set the maximum amount of tax withholdings, while contractors fill out a W-9 since they make tax payments to the Internal Revenue Service by themselves.

Freelancers and Contractors

Individuals who render services to companies as contractors (i.e. non-employees) must fill out a W-9 form for every company/business for who they carried out non-employee work. Freelancers are one of the categories of individuals who are usually asked to complete a W-9 form. Freelancers perform various short-term projects such as graphic design, research and writing projects. Since these kinds of projects eventually run out, freelancers are not needed full time, thus the need to complete W-9 forms.

Consultants

Consultants are another category of individuals who complete a W-9 form. Consultants are experts in their respective fields, who are invited to advise companies on a variety of issues including personnel training, cost-cutting, public relations, and others.

Also, independent contractors such as repair people, landscapers, and custodians are required to complete W-9 tax forms. They do this irrespective of the length of time it takes to complete their work, whether it be weeks, months, or even years. Such contractors are responsible for paying their own taxes.

When companies have W-9 forms on file, they can show the Internal Revenue Service that they did not withhold payroll taxes from the money they paid to you. Do note that completed W-9 forms are not submitted to the IRS; they should be handed over to the company that contracted your service.

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