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September 12, 2022

What is a W-9 Form and How Does it Work?

A W-9 form is a request for taxpayer identification number (TIN) and certification. It is used by businesses to gather information from contractors and other payees. The information collected on the W-9 form is used to prepare 1099 forms, used in the process of Tax Information Reporting, which are used to report income to the IRS.

What data is collected on the form?

The W-9 form must be completed by the contractor or payee and returned to the business before any payment can be made. The form must include the contractor or payee's name, address, and TIN. The TIN can be either a Social Security Number (SSN) or an Employer Identification Number (EIN). The business will use the information on the W-9 form to prepare a 1099 form for the contractor or payee.

What is a 1099 form?

A 1099 form is an information return that is used to report certain types of income to the IRS. The most common type of 1099 form is the 1099-MISC, which is used to report miscellaneous income. This includes income from freelance work, royalties, and rental property. Other types of 1099 forms include the 1099-INT (used to report interest income), the 1099-DIV (used to report dividends and capital gains), and the 1099-G (used to report government payments).

How does it work?

The W-9 form is completed by the contractor or payee and returned to the business. The business will use the information on the form to prepare a 1099 form, which is then sent to the contractor or payee and the IRS. The 1099 form reports the income that was paid to the contractor or payee during the year. The contractor or payee will then use this information to complete their tax return.

When is a W-9 Form needed?

A W-9 form is typically used when a business is paying someone for services rendered, such as a freelancer or independent contractor. It can also be used in other situations, such as when paying rent to a landlord or investing in certain types of securities.

What if I don't have a TIN?

If you don't have a TIN, you can apply for one by completing a W-7 form. This form is available on the IRS website.

Do I need to sign the form?

Yes, the form must be signed and dated by the contractor or payee. By signing the form, the contractor or payee is certifying that the information on the form is accurate and that they are authorized to receive payments without backup withholding.

What if I make a mistake on the form?

If you make a mistake on the form, you can correct it by submitting a new form with the corrected information. Be sure to check with the business that requested the original W-9 form to see if they require a new form or if they will accept the correction.

What if I don't want to provide my TIN?

If you don't want to provide your TIN, you can still receive payments; however, the business will withhold 28% of the payment for taxes. This is called backup withholding. You can avoid backup withholding by providing your TIN on the form and signing it to certify that the information is correct.

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