The IRS W-9 form (Request for Taxpayer Identification Number and Certification) is filled out by an independent contractor or anyone paid by a business for their service but is not considered an employee.
In this guide, we’ll explain how to fill out a W-9 form and why it is an important United States tax document for any business entity.
What Is a W-9?
If you’re a c onsultant, contractor, freelancer, or another self-employed individual, you’ll need to complete a W-9 form stating you aren’t subject to backup withholding and will pay your own taxes. This includes income tax and contributing to Medicare and Social Security taxes. The W-9 form also helps determine your tax obligation for the year.
Your client will need to obtain the W-9 form from you if they plan on paying you at least $600 annually. They’ll also need the information on the W-9 to verify your identity and have a record of your taxpayer identification number (TIN).
How to Fill Out a W-9
Below are steps you can follow to fill out your W-9 form, depending on your type of business.
Sole Proprietor or Single-Member Limited Liability Company (LLC)
- Visit the IRS website and download the W-9 form. Write your full name on the space provided. Make sure it matches the name on your tax returns.
- If you operate a sole proprietorship under a "doing business as (DBA) name, write that on the space for a business name. You can leave it blank if you operate under your own legal name. If you are a single-member LLC, write the legal business name you registered for your LLC. This is also your disregarded entity name.
- Tick the box for "Individual/Sole Proprietor or Single-Member LLC."
- Leave the exemptions blank. Exemptions only apply to businesses and entities.
- Use the address that matches the information on your tax returns. This makes it easier for the IRS to match your f orm 1099 with your 1040 form.
- For Part I, you’ll need y our taxpayer identification number (TIN). As a sole proprietor, it’s your Social Security Number (SSN). For a single-member LLC, you can use your SSN or your employer identification number (EIN). If you are a resident alien and don’t have an SSN, use your IRS individual taxpayer identification number (ITIN).
- For Part II, under the "Certification" section, you’ll sign and date the form.
You should return the completed form to the company or person you are working with, otherwise known as the requester.
LLC Classified as a Partnership or Corporation
- Visit the IRS website and download the W-9 form. Write the name of your LLC, as shown on your tax returns.
- Enter your DBA name or trade name on the "Business Name" line.
- Tick the "Limited Liability Company" box. On the tax classification line, write the letter corresponding to what your business is registered as — a C corporation, S corporation, or a partnership.
- Leave the exemptions blank. These are generally used by corporations receiving dividend payments or exempt from reporting as required by the Foreign Account Tax Compliance Act (FATCA). You can find the qualifications for the exemptions under "Specific Instructions, Exempt Payee."
- Write down your business address, city, state, and ZIP code.
- Print the employer identification number (EIN) of your LLC.
- Sign and date the W-9 form and return it to the company or person who requested it.
Ensuring you enter all the correct information on your W-9 form ensures that payments made to you will be properly reported to the IRS. Consult with your accountant if you are not clear on your business structure or federal tax classification.
Who Needs to Fill Out a W-9?
A W-9 form is commonly completed by self-employed individuals. A person is considered self-employed when they earn a living by working for themselves, but not as a shareholder of a corporation or an employee of a business or another person. Self-employment means carrying on a trade or business as an independent contractor and working as a vendor, freelancer, or consultant.
As a trade worker or contractor, businesses will ask you to complete a W-9 form so that they have the necessary information to complete form 1099-NEC. This is a document that companies fill out to report payments made to nonemployees during their yearly operation. Aside from this reason, financial institutions and other entities may also ask an individual to fill out a W-9 form in certain situations, such as:
- Certain real estate transactions, e.g., a person takes on a mortgage loan to finance a home purchase
- A person claims a deduction for mortgage interest on their federal income tax return
- A person acquires or abandons a secured property
- A person is granted cancellation of debt
- A person won a prize worth more than $600
- To account for contributions to an individual retirement arrangement (IRA)
W-9 vs. Other Tax Forms
The Internal Revenue Service (IRS) has over 800 forms and schedules for taxpayers to report income, calculate taxes to be paid, and disclose required pertinent information regarding their tax status. Fortunately, you don’t need to know all of the forms. You just need to be familiar with a few common documents you will encounter as an employee or an independent contractor.
W-9 vs. W-4
The main factor determining whether a person needs to complete a W-9 or a W-4 depends on the business relationship between the individual commissioning the service and the one performing the work. As established, a W-9 is completed by self-employed individuals working in the capacity of freelancers and contractors. Meanwhile, the W-4 form (Employee’s Withholding Certificate) is filled out by full-time employees to specify their tax situations to their employers.
The W-4 informs the employer of the employee’s marital status, number of allowances, dependents, other jobs, and more. All of this is necessary information that the employer uses to calculate the amount of tax to withhold from the employee’s paycheck. Accurate information reported on this document allows employers to withhold the correct taxes from employees.
The difference between an independent contractor and an employee can get tricky sometimes. When that happens, examine the degree of control your client has over your work. Here are factors to use to determine if you’re an employee or a contractor:
- Behavioral: Does the paying party have the right to hire or fire the worker? And who decides on the time, place, and manner that the job is done?
- Financial: Does the worker provide their own supplies, or is it paid for or reimbursed by the company along with other work-related expenses?
- Type of relationship: Are contracts drawn between the payer and the payee? Are there employee-type benefits? Does the worker have the opportunity to gain a profit or incur a loss due to unpaid debts, delays, or damage to equipment?
Hence, as an independent contractor, you have to protect your status and ensure you’re completing the right form. Because a wrong categorization can have huge financial consequences. If it’s determined that you should have been treated as an employee, the employer will need to remit unpaid taxes and may be subjected to penalties and interest. You may also be asked to repay business expense deductions you’ve previously claimed.
W-9 vs. 1099
The IRS has a total of 18 different 1099 forms, all of which serve the same purpose. This form reports the different types of income a person received during the tax year from nonemployment-related sources. These incomes may be from consulting or freelancing, real estate income, dividends from investment, interest from bank accounts, or pension contributions.
The W-9 form and various 1099 forms are used together. You will fill out the W-9 form to provide your clients your TIN. In turn, they will use the information from the W-9 form to complete the 1099-NEC form (previously called the 1099-MISC form). This document will report all payments made to you within the tax year.
When you file your federal taxes, you must attach all the 1099 forms you received from clients or other institutions. The companies you performed work for will also submit a copy of your 1099-NEC with their tax returns.
Keep Track of Your W-9 Forms
For self-employed individuals, the W-9 form serves as an agreement that you will work as an independent contractor a nd be responsible for paying your taxes. For every W-9 form you complete for a client, any payments you receive will not have tax withholding. This means you have to figure out your tax obligations on your own, including any estimated taxes you’ll need to remit within the tax year.
Keeping track of your W-9 forms is important because they also determine the number of 1099 forms you should receive by early February of the next year for the upcoming tax season. Make sure you have all the documents you need to do your taxes accurately and on time.
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