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Do I have to complete IRS Form W-9?

November 10th, 2013 2 comments

This is a common question.  You provided services to someone.  It may have been a small project like mowing the lawn, baby sitting and so on.  It may been been a one time project that you performed for a local business such as computer work or moving boxes. You send the employer an invoice and they send you IRS Form W-9 and ask you to fill that out before you get paid.  Do you have to complete out Form W-9 in order to get paid?

IRS Form W-9 is titled “Request for Taxpayer Identification Number and Certification”.  Its a one page form that asks for the name of the individual or business, appropriate federal tax classification #whether individual/sole proprietor, C or S corporation, partnership, trust/estate, limited liability company or other#, address, account number and TIN (social security number for an individual or employer identification number for a business).  The form also asks for the signature of the U.S. person and date.

An employer will request Form W-9 from independent contractors so they can report the payments to the IRS at the end of the year.  Generally, IRS Form 1099-MISC is completed by the employer and submitted to the IRS and State tax agencies only if the amount of payments made to that contractor exceeds $600 for services on an annual basis.  It is common to request the W-9 in advance just in case an independent contractor breaks that minimum threshold in the future.

An independent contractor will know if the employer reported anything to the IRS if they receive a copy of Form 1099-MISC by the end of January.  Regardless of the amount of money the employer pays an independent contractor, it is the employer’s responsibility to acquire and have on file a completed and signed Form W-9 from every independent contractor.

Employers use Form W-9 to collect the TIN of any U.S. person they plan to engage in a business activity with.  Form W-8 is used for foreign entities or individuals and Form W-7 is for individuals who become U.S. residents for tax purposes but who are not eligible for a social security number.

If an employee does not complete Form W-9 and return it to the employer, the employer may be required to do backup withholding which means that 28 percent of your check will be forwarded to the IRS. An employer must apply backup withholding if the employee fails to provide a TIN or provides a TIN that is incorrect.  The IRS has established a TIN matching program that enables Form W-9 requestors to verify TINs with the IRS for information returns 1099-B, DIV, INT, K, MISC, OID and PATR.

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