Key Takeaways

  • A W-9 form is used to provide a taxpayer identification number (TIN) to a business or financial institution that is required to report payments to the IRS.
  • It’s primarily used by freelancers, independent contractors, and vendors, but also by entities like financial institutions and lenders.
  • The form helps businesses prepare Form 1099s and comply with IRS reporting obligations.
  • W-9s are not submitted to the IRS by the payee but are kept on file by the requester.
  • Keeping W-9 details current is crucial for accurate tax reporting.
  • Electronic submission of W-9s is allowed but should be secure to avoid identity theft.

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).

Common Situations Requiring a W-9

There are several situations where a Form W-9 is typically required:

  • Freelance or contract work: Independent contractors must submit a W-9 to any business paying them $600 or more annually for services rendered.
  • Rental payments: Property owners may provide a W-9 to tenants or management companies for income reporting.
  • Royalty and dividend income: Individuals receiving such income may need to submit a W-9 to investment firms.
  • Real estate transactions: W-9s are often used in connection with mortgage interest, acquisition or abandonment of secured property, or debt cancellation.
  • Financial accounts: Banks or brokerage firms may require a W-9 to report interest or dividend income.
  • Legal settlements: If a legal award or settlement is taxable, the payee might be required to provide a W-9 for IRS reporting.

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.

How to Submit a W-9 Securely

Due to the sensitive nature of the personal and business information included, the method of delivering a W-9 is critical. Here are best practices:

  • Avoid unencrypted email: Email is not a secure method unless properly encrypted.
  • Use secure portals: Many companies use encrypted client portals or e-signature platforms to request and submit W-9s securely.
  • Never share publicly: Do not upload your W-9 to public platforms or unprotected shared folders.
  • Verify the requester: Confirm that the request is legitimate by contacting the business directly, especially if the request comes via email or phone.

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.

TIN Numbers

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.

Backup Withholding and W-9

The W-9 form also plays a key role in determining whether backup withholding applies. Backup withholding is a type of tax withholding required by the IRS in certain circumstances—typically when:

  • The payee fails to provide a correct TIN,
  • The IRS notifies the payer that the payee provided an incorrect TIN,
  • Or the payee is subject to backup withholding due to underreporting of interest or dividends.

If backup withholding applies, the payer must withhold 24% of the payment and remit it to the IRS. Completing a valid W-9 form with accurate information can help individuals and entities avoid this withholding.

Frequently Asked Questions

1. What is a W-9 used for?

It’s used by businesses to request your taxpayer identification number for IRS reporting, typically to issue Form 1099 for non-employee compensation or other reportable payments.

2. Do I have to send my W-9 to the IRS?

No. You provide your completed W-9 to the requester (e.g., a business or financial institution), not the IRS.

3. Can I use an EIN instead of my SSN on a W-9?

Yes. Sole proprietors and businesses may use an Employer Identification Number (EIN) if applicable.

4. How often should I update my W-9?

Submit a new W-9 whenever your name, business name, address, or TIN changes.

5. Is it safe to email a W-9 form?

Not unless the email is encrypted. To protect your identity, use secure file sharing or encrypted portals.

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.