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The W-9 form is important for anyone that has worked as an independent contractor during the past year, so remember to file one if this applies to you.
It’s tax season, which means that you’re probably elbow-deep in thinking about all of the different terms, forms, and miscellaneous paperwork that goes along with it. It is often a hard time of year for many people since there is a lot of confusion around the different forms (like a Schedule SE or something else, for instance) that you may need to fill out or have copies of, whether you’re doing your individual taxes or the taxes for your business. For many, it makes springtime one of the most stressful seasons. Some of the most common tax forms that you interact with aren’t just filled out in the spring, however. Some forms are filled out whenever you get a new job, specifically the W-4 (which most people are familiar with if they’ve ever been an employee) and the W-9 (a similar but slightly different form). Let’s explore what the W-9 is, who needs to have it, and what it does.
What is the W-9?
The W-9 is a very similar form to the W-4, but it is used for independent contractors rather than employees. While it may not seem like a significant difference, the IRS has very specific rules about what differentiates an employee from an independent contractors, and it is important for small business owners to know and understand the difference. As an independent contractor, the hiring business (usually a client) will pay the worker, but not withhold any taxes. The business also doesn’t have to pay their part of the employment taxes for that worker (the worker is self-employed, so they are responsible for both the employer part of the employment taxes as well as the employee side). The business does, however, have to account for where the money went that they paid out, and the W-9 gives them the information that they need to do that.
What is On The W-9?
The W-9 is much shorter than its counterpart for employees (the W-2) and only requires five pieces of information: Your name, your business name if you have one, your address, your taxpayer ID number (typically your social security number), and the type of business you operate.
Who Should Fill One Out?
Anyone who works as an independent contractor will likely have to fill out a W-9 form, and they should fill out a replacement one for all active clients if their information changes (like their name or address).. However, there are other (less common) circumstances where you might fill out the form as well, such as when you have debt canceled or during real estate transactions. Pretty much any situation where you receive non-employee compensation, interest, or dividends.
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