Estimated reading time: 10 minutes

What Is Form W-9?

Form W-9, officially titled the “Request for Taxpayer Identification Number and Certification,” Is an official document used in the United States for tax purposes. It is also known as the “Request for Taxpayer Identification Number and Certification” form. The primary purpose of the W-9 form is to provide your taxpayer identification number (TIN) to entities that will be paying you income during the tax year.

What Are the Uses of Form W-9?

Here are some common uses of Form W-9.

Request for Taxpayer Information

Independent Contractors: Employers often use Form W-9 to collect necessary information from independent contractors or freelancers who provide services to the company. This information includes the contractor’s name, address, and taxpayer identification number (usually a Social Security Number or an Employer Identification Number).

Income Reporting

Payments to Independent Contractors: Businesses use the information collected through Form W-9 to report payments made to independent contractors to the Internal Revenue Service (IRS). This is crucial for tax reporting purposes.

Backup Withholding

In some cases, if a payee does not provide a taxpayer identification number on Form W-9 or provides an incorrect one, the payer may be required to withhold taxes at a backup withholding rate. This is a precautionary measure to ensure that taxes are paid on the income.

Interest and Dividend Payments

Banks and financial institutions may use Form W-9 to collect information from individuals who earn interest or dividends. This information is important for reporting income to the IRS.

Real Estate Transactions

Real estate transactions often involve the use of Form W-9. For example, when a property is sold, the title company may require the seller to fill out a Form W-9 to report the sale to the IRS.

Partnerships and LLCs

Members of partnerships and limited liability companies (LLCs) may be required to provide a W-9 to the partnership or LLC. This is important for tax reporting purposes within the business structure.

Nonprofit Organizations

Nonprofit organizations may use Form W-9 to collect information from vendors, service providers, or other entities they make payments to.

Government Agencies

Government agencies may also use Form W-9 when making payments to individuals or businesses.

What Are Examples of W-9 Income?

Common scenarios include freelance work, consulting services, rental income, and other types of income that may be subject to reporting.

For example:

Freelancers, members of partnerships and limited liability companies (LLCs), participants in real estate transactions, investors, nonprofit organizations, customers of financial institutions: Banks and other financial institutions may require customers to complete a Form W-9 in order to report interest payments and other related income; payees of government agencies: Payees may also be required to provide a Form W-9 by a government agency in order to make a payment to an individual or business.

Who Needs to Complete Form W-9?

The W-9 is often requested by businesses or individuals that plan to make payments to you, such as clients, employers, or financial institutions.

Includes persons who obtained Form 1099: Individuals or entities who obtained tax returns such as 1099-MISC from other entities will also need to complete a W-9.

Overall, any person or entity that engages in income-generating activities in the United States, especially those that have financial dealings with other entities, may be required to complete a W-9 form. This helps to ensure that payers are able to accurately report the proceeds of payments made to payees.

How to Fill Out Form W-9?

Filling out Form W-9 involves providing your personal information and tax identification number (TIN) to a requester, usually a business or entity that will be making certain types of payments to you. Here’s a step-by-step guide on how to fill out Form W-9:

Steps to Fill Out Form W-9:

Name

Enter your full legal name on the first line. This should be the name associated with your tax records.

Business Name (if applicable)

If you are operating as a sole proprietorship or a single-member LLC, you can leave this line blank. If you have a business name, enter it on the second line.

Federal Tax Classification

Check the appropriate box for your federal tax classification. Options include Individual/sole proprietor, C Corporation, S Corporation, Partnership, Trust/estate, Limited liability company (LLC), etc.

Exemptions

If you are exempt from backup withholding, you’ll need to check the appropriate box. Generally, individuals are not exempt unless the IRS has notified them that they are.

Address

Provide your mailing address. This is the address to which the requester will send tax documents.

City, State, and ZIP Code

Fill in your city, state, and ZIP code in the spaces provided.

Account Numbers

Optionally, you can provide your account number(s) in Part I if you want the requester to use this number for any information reporting requirements.

Social Security Number (SSN) or Employer Identification Number (EIN)

Enter your SSN or EIN in the space provided. This is a crucial part of the form, and providing the correct number is essential.

Signature

Sign and date the form. If you are filling out a digital version, you may use an electronic signature.

Capacity in Which Acting

If you are filling out the form on behalf of a business or another entity, indicate your capacity (e.g., officer, director, partner).

Date

Provide the date on which you are signing the form.

Tips

Double-check all information for accuracy, especially your SSN or EIN.

If any information changes after you submit the form, you may need to provide an updated W-9.

Keep a copy of the completed form for your records.

A W-9 form is an official document used in the United States for tax purposes. It is also known as the “Request for Taxpayer Identification Number and Certification” form. The primary purpose of the W-9 form is to provide your taxpayer identification number (TIN) to entities that will be paying you income during the tax year.

Here Are Some Key Points about The W-9 form

Identification Information

The form collects essential identification information, including your name, business name (if applicable), address, and taxpayer identification number (TIN).

For individuals, the TIN is typically the Social Security Number (SSN). For businesses, it is the Employer Identification Number (EIN).

Certification

By signing the W-9, you are certifying that the TIN you provided is correct and that you are not subject to backup withholding.

Backup withholding is a tax withholding that may be applied in certain situations, such as when a taxpayer fails to provide a correct TIN.

Usage

The W-9 is often requested by businesses or individuals that plan to make payments to you, such as clients, employers, or financial institutions.

Common scenarios include freelance work, consulting services, rental income, and other types of income that may be subject to reporting.

Not Filed with the IRS

Unlike some other tax forms, the W-9 is not sent to the Internal Revenue Service (IRS). Instead, it is kept on file by the entity requesting the information.

Form 1099 Reporting

The information provided on the W-9 is used by the payer to complete and submit Form 1099-MISC or other relevant 1099 forms to the IRS.

These forms report the income paid to you, and the IRS uses them to track and verify income for tax purposes.

It’s important to note that if you receive income and are required to complete a W-9, you should keep a copy of the completed form for your records. If you fail to provide a TIN or provide an incorrect one, you may be subject to backup withholding.

Remember that the completed W-9 is not sent to the IRS; instead, it is kept on file by the requester and used for reporting income to the IRS. If you receive income from various sources, you may be asked to fill out multiple W-9 forms for different payers.

What Is a W2 Form?

The W2 is a tax form crucial for reporting an employee’s earnings, taxes withheld, and other financial details to the government. In the U.S., it’s a key document for individuals during tax season.

• Income Details: The W2 breaks down all the wages and salaries earned throughout the year.
• Tax Deductions: It outlines pre-tax and post-tax deductions like health insurance, social security, and retirement contributions.
• Federal and State Taxes: The W2 specifies the income taxes paid at both the federal and state levels.
• Other Income: If there are additional income sources, such as part-time work or investment returns, these details may also be included.

What Is a W2 Employee?

A W2 employee refers to an individual formally employed by a company or employer. The employer is responsible for deducting income taxes, social security, and health insurance, following federal and state tax regulations. These employees are typically full-time or part-time workers with a formal employment relationship, distinct from independent contractors (1099 employees).

W2 employees have a formal employment connection with the company, which provides them with a W2 form detailing their annual income and various tax withholdings. This form needs to be submitted to the Internal Revenue Service (IRS) during tax season, and a copy is provided to the employee.

Who Files Form W2?

The W2 form is submitted by the employer to the employee. In the U.S., employers are responsible for generating and providing W2 forms, reflecting an employee’s total income and tax withholdings for the past calendar year. Simultaneously, employers must submit the W2 information to the IRS.

How to File a Form W2?

Employees typically receive the W2 form by the end of January each year. Once received, they can choose between:

• E-filing (Recommended): Many opt for electronic filing, a quick and secure method. Taxpayers can use tax software or online filing services to input W2 information and directly submit the report to the IRS.
• Paper Filing: Alternatively, individuals can opt for traditional paper filing. They fill out the printed W2 form, attach tax documents, and mail it to the IRS. This process takes longer and might delay tax refunds.

When is the W2 Deadline?

The W2 deadline is January 31st each year. Employers must provide W2 forms to employees by this date and submit them to the IRS on the same day. This ensures that employees have ample time to prepare their tax returns before the filing deadline. If you haven’t received your W2 by the end of January, it’s advisable to promptly contact your employer or the HR department.

ile it with the Social Security Administration by January 31 each year[2].

Key Differences Between Form W-2 and Form W-9

While both forms involve income reporting, Form W-2 and Form W-9 have some important differences:

The main difference is that Form W-2 is for employees from whom taxes are withheld, while Form W-9 is for contractors who are responsible for their own taxes[7].

Implications for Global Employers

For companies with international teams, classifying workers correctly and using the right tax forms is essential for compliance. Some key considerations:

• Worker classification: Understand the criteria for determining employee vs. contractor status in each country where you have workers. Misclassification risks fines and penalties[8].
• Local tax laws: Research income reporting and tax withholding requirements in your workers’ countries. You may need to issue additional local tax forms besides the W-2 or 1099.
• Streamlined processes: Use global payroll and compliance software to automate tax form generation and filing across multiple countries. Integrate this with your onboarding system to collect W-9s from international contractors.
• Expert guidance: Partner with local tax experts and legal counsel to ensure proper worker classification and tax compliance in each country.

By understanding the differences between Form W-2 and Form W-9 and building efficient global compliance processes, employers can reduce risk and focus on engaging their international talent.

Conclusion

Form W-2 and Form W-9 are both important for income reporting in the U.S., but they apply to different types of workers. As a multinational employer, it’s critical to use the right form for each worker based on their employee or contractor status. With careful compliance and streamlined global processes, you can pay your worldwide team accurately and on time.