W-9 What Is it Used For: Everything You Need to Know
W-9 what is it used for? A Form W-9 is sent to you to fill out when a business is going to be paying you.3 min read
2. Business Tax ID Numbers
3. Who Needs to Provide W-9 Information
4. Avoid Identity Theft
5. Keep W-9 Information Current
6. TIN Numbers
W-9 what is it used for? A Form W-9 is sent to you to fill out when a business is going to be paying you. It asks you to record your tax ID number, or TIN, as well as your legal name and mailing address. The full name of the form is Request for Taxpayer Identification Number and Certification, and it's required by the Internal Revenue Service (IRS). However, the person getting paid and filling out the form doesn't submit it to the IRS.
Why a Business Requests a W-9
The completed W-9 is needed when the business files IRS paperwork, like Form 1099, which reports the amount of money the company paid out to you. The IRS needs your tax ID number on the W-9 to identify you and connect the income the business pays out to the person or business that earned it. Most of the time, the number needed to fill out the W-9 is your Social Security number (SSN).
Business Tax ID Numbers
For someone operating a sole proprietorship, the SSN or Employer Identification Number, also called an EIN, can be used. The SSN is typically preferred, though. The SSN is also the preferred number to put on the W-9 for single-member limited liability companies (LLCs). If the business is a partnership or an LLC with multiple members, the EIN is the proper number to put on the W-9.
Who Needs to Provide W-9 Information
W-9 information is typically required for self-employed people, like freelancers, contractors, and consultants, who take on work for businesses without being employed by those companies. If you've been hired by a company and are asked to fill out a W-9, you should ask some questions to determine if you're an employee of the company or an independent contractor. A financial institution that pays dividends or interest income might ask you to fill out a W-9, but this shouldn't be necessary if you provided your Social Security number when opening the account.
Avoid Identity Theft
If anyone you're doing business with asks you to fill out a form W-9, make sure the request is legitimate before you put your Social Security number on it, due to the danger of identity theft. Also, after you fill the form out, don't leave it in an unsecured location. This form should not be sent as an unencrypted email attachment, and it shouldn't be faxed. For an identity thief, the information on this form is extremely valuable.
Keep W-9 Information Current
Make sure your W-9 information is current by submitting a new W-9 form to any business that pays you if you change your name, your business name, tax ID number, or address.
If you receive payment for a service that you provide is an inch independent contractor, if you pay interest on a mortgage account, or if you put money in an IRA you typically need to submit a form W-9. The W-9 form is also used anytime businesses need your personal information, like your address, name or taxpayer identification number because they need to issue official tax documents to both you and the IRS.
Your tax identification number or TIN is, for an individual, your Social Security number. If you're filing the W-9 form as a business entity, however, then your TIN would be your employer identification number (EIN). At its core, Form W-9 is used as a way to request a tax ID number, while Form 1099 is used in reporting non-wage income.
The biggest difference between forms W-9 and 1099 is that with a Form W-9, the entity that will be paying the individual or another entity asks for the W-9 to be filled out and then uses the information from the W9 to prepare Form 1099 for the person or entity doing the work. The person or entity doing the work then uses Form 1099 to file his own taxes.
If you need help with how to use a W-9, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.