The IRS W9 Form In Brief
For people that are independent contractors, as well as for those who work for themselves, a W9 Form is wanted to report their Social Security Number or Business Tax Identification Number to their clients. This is a pretty cut and dry bit of paper when it comes to government forms. You may simply need to provide your name, your address, as well as your Social Security Number (or your Employer Identification Number, for people that are contractors and are thus considered a new business entity all their own).
Besides the above information, an IRS W9 Form will also ask whether or not you are subject to backup withholding. What’s “backup withholding,” you could ask. Well, that is withholding at a fixed rate of twenty-eight p.c on payments made to you or your business under certain circumstances. There are 2 commonplace reasons for using backup withholding. One reason is if your name and Social Security Number does not match the name and Social Security Number the IRS has on file for you. Another reason would be if you have outstanding tax debt. In this situation the IRS would have informed you that you’re subject to imperative backup withholding till the outstanding tax debt is completely paid for.
During the tax season of the year, contractors will be getting W9 forms to finish. Since in that time of the year, clients are making preparations to send out their 1099 forms. The 1099 Form is used to report self-employment income.
Other places you may be getting a W9 from are brokers and monetary establishments. They would ask for a W9 if you will earn interest revenue, dividends, or trading stocks and other stocks. As well as the common places a few of the people may receive requests for the W9 form from more peculiar places such as owners and other folks or firms. This is utilized to ask, officially, from someone or business their name, address, and taxpayer identification number in order for the requesting party to correctly issue tax documents to the IRS.
As a general rule, any sort of business that requests a W9 Form is one that pays you interest, in general, the types of businesses that request Form W-9 is any business that pays you reportable earnings. However if you should happen to feel that you have received this form from a bizarre source you must ask them why they are asking for the form and what they’ll be using it for.
What about foreign subcontractors? With foreign sub-contractors A W9 isn’t required, it is just needed to gather information from US folks and firms. However if you have a foreign contractor that is working for you, they will most likely be needed to fill out one of the varied W8 Forms.