A 60 Second Guide to the W-9 Form

The W-9 Form, titled “Request for Taxpayer Identification Number and Certification,” is an IRS form used to request a taxpayer identification number. The form is generally used when an individual, freelancer or independent consultant (i.e., non-employee) is hired to provide goods or services to another individual or business. The purpose of the form is to provide needed information so that a 1099 can be complete at the end of the year.

What to do if you receive a W-9

If you or your business provide goods or services for sale, the buyer may send you a W-9 form to complete. As noted above, the purpose of the form is to give the payor the necessary information to complete a Form 1099 to report payments to the IRS at the end of the year. Generally, companies will not issue payment to non-corporations until they receive a completed W-9.

Completing a W-9 is simple. The information required is your name or your business’ name, address, taxpayer identification number, type of business, and whether you are subject to mandatory backup withholding. The taxpayer identification number, or TIN, is either your social security number or employer identification number. Because I don’t like to give out my social security number, I obtained an employer identification number to use on W-9s. You can get an EIN for free from the IRS online.

Because a W-9 contains confidential information, there are two cautions to keep in mind. First, make sure you actually are doing business with the company requesting the information. And second, be sure to transmit the W-9 in a secure way. This is particularly important if you use your social security number.

When should you send a W-9 to a contractor?

If you or your business hire an individual or non-corporate business (i.e.: freelance writer, laborer, sub-contractor), it is important to have them complete a W-9 Form. This will allow you to issue a form 1099 should your total payments to the individual or business exceed $600 in a year. If you are certain that payments will not exceed this amount, a W-9 is not necessary. The key is to obtain the W-9 before payment is made. Once you’ve paid the contractor, it can be difficult to get the necessary information from them. In effect, you’ve lost your leverage. So to protect yourself, obtain a W-9 as soon as you enter into a transaction and before they are paid.

Didn’t Obamacare change Form 1099 requirements?

The Patient Protection and Affordable Care Act of 2010, better known as Obamacare, required 1099s to be issued for payments to corporations. Before the law, 1099s did not need to be issued to corporations that provided goods or services to you. The new requirement was the subject of harsh criticism, and the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 eliminated the requirement. (Source: IRS)

If you need help filing your taxes this year, you may want to consider both Turbo Tax and H&R Block.  Their free online tax software can make your tax nightmares disappear.

Published or Updated: October 28, 2012
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Online TV says:

    If you don’t know what a W9 form is, I would definitely recommend that you call the IRS immediately

  2. Sar says:

    I have a question. If I was a candidate appearing at an interview wherein I had to fly in, do I need to fill in W-9 for my expenses to be reimbursed by the hiring company? Lets say the amount is a about $605.00

    Thanks in advance!

    • Michael says:

      Sar

      A w-9 is needed only if income is received by you. So this transaction would not qualify no matter the amount of the expense.

      The business you are seeking the reimbursement from should include that reimbursement as a business expense, however there are no additional forms you need to file. Providing the business a receipt is all that is required on your part and you will not be eligible to claim this as a business expense of your own.

  3. francisco says:

    if i field a w-9 at the beginning of the year and i made 15000 what percent of taxes do i have to pay at the end of the year

  4. Paula Chao says:

    Hi,
    I freelanced for a company in 2010. I did a sample for them and got paid only $25. I didn’t get anymore work from them again all year. But at the end of the year, their finance person emailed me and said that I still needed to file a W-9.

    $25? According to this article, I don’t have to file anything. Could you point me to the right IRS guideline that says I don’t have to do it? Much much appreciate it!

    Paula

    • Michael says:

      Hi Paula

      Generally, companies require W-9’s be filled out prior to employment, so situations like this don’t happen. That said, since you only made $25, they are not required (but can choose to do so) to submit a 1099 on your behalf to the IRS, so you can consider this case officially closed. If you want karma points, you can ease the companies headache just a smidge and provide the W-9.

      Remember though, you will still have to report that income on your 2010 tax return. As an independent contractor, it matters not how much you made from each job, rather from your profession as a whole. There are no limitations to reporting income like there are for businesses.

      Schedule SE will need to be filed along with your tax return this year.

  5. Moe says:

    I own a photography company. It is a sole proprietorship. I shoot and prvie the clients with photos on a cd or dvd. Payments are made to my company and not me personally. I shot for musicians and also do building shots for the real estate industry. Where does this leave me??

  6. Marcelo says:

    I am a foreigner giving musical services for an advertising agency.
    They are asking for a w-9 form but I think it does not apply for me.
    Is it a W-8 the kind I should fill?
    Thank you
    Marcelo

  7. Will says:

    I have a very small organic fruit farm that I lose money on every year (hobby). I started selling some Red and White Currants to a local restaurant last year. They paid me decent, but I never made more than $500 from them. This year they talked me down even lower on my prices, so I gave them one batch (5 lbs) and found someone else who would give me a decent price.

    All of a sudden, I get this W-9 in the mail from them. I really do not want to give them my SS# and since I was never paid more than $500 by them, why do I need to? Like I said, this is a hobby for me. With my time and money invested I lose about $1000 a year. I just like working outside and providing fresh organic fruits for my neighbors.

    The restaurant goes to lots of local farmer’s markets and spends quite a bit of their money there. I highly doubt they give the vendor’s there a W-9.

    I’m scared that they will fudge their books and say they paid me a lot in cash and try and run me over the coals with the IRS, because I sold currants to another local eatery. I have my canceled checks from them (bank imprints), but what should I do here? Should I just ignore their W-9?

    Thanks,
    Will

    • Rob Berger says:

      Will, there is nothing requiring you to complete the W-9 as far as I know. But some companies won’t pay you unless you do. Since the paid you less than $600, it’s a bit surprising that they sent you a W-9. In terms of what they paid you, I’d keep copies of the checks so you can prove what the total payments are. Also, since you are selling goods, you may want to talk to an accountant to see if you can deduct the costs of producing the produce from the revenue. You may even be able to record a loss for tax purposes. It gets a bit tricky when assessing whether you are in a hobby or a business, but a tax professional can assess this for you.

  8. Arlene Royce says:

    We are required per our tax account to have W-9’s filled out by all real esate offices that sell our listings, at first we felt Title companies issue the other office their commission so title companies should send them the 1099’s( if not incorporated) but they told us the other offices in the transactions (who sold our listing) was paid their commission out of our seller’s pocket so we have to issue the 1099’s (if paid over 600.00 and are not incorporated). Sure it would be easier to get those W-9’s for our file before it closes but not always happens that way so I do sometimes have to ask over and over again for W-9. Not fun doing extra 1099’s besides doing them for agents in our office, extra work for sure. I’ve had to do 11 extra 1099’s for other real estate offices who sold our listings, other’s were incorporated so only need W-9 for file for following years to keep track of who get’s a 1099 and who doesn’t.

  9. Thomas J. Wyman says:

    I’m selling some equipment to a big company. The amount is substantially lower the 5,000 dollars. Am I required to give them this w-9? They weren’t sure either, but I need to get this stuff unloaded and off the property its on before it costs me any more in storage.

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