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What Is a W-9 Form? Who Can File and How to Fill It Out

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Financial institutions may ask a new client to fill out a W-9 as it is a useful way of collecting and recording a customer’s details. Real estate businesses may also ask tenants to complete a W-9 as a method of storing their information as well. This is where you sign and date the form, indicating that you provided your accurate information. This is a legal document, so it’s important to read and follow all instructions carefully. Businesses use W-9 forms to collect taxpayer identification numbers for nonemployees who work for them during the year. They can then use these TINs to help them fill out 1099 forms at the end of the year.

Willfully falsifying any information or affirmations subjects the taxpayer to fines or imprisonment. At the end of the tax year, the business you did work for will use the information on your W-9 to complete a 1099-MISC. A financial institution may also require you to report interest, dividends and capital gains earned by their customers. The main difference between Form W-9 and Form W-4 is that Form W-9 is for independent contractors and other payments to people who are not employees, while Form W-4 is for more traditional employment relationships. If you get a 1099 form in the mail, a copy is also sent to the IRS. So be sure to accurately report any payments you received during the year when filling out your tax return.

Form W-9 – What Is It and How Is It Used?

If you use a substitute form, you are required to provide the Form W-9 instructions to the payee only if he or she requests them. However, if the IRS has notified the payee that backup withholding applies, then you must instruct the payee to strike out the language in the certification that relates to underreporting. You can replace “defined below” with “defined in the instructions” in item 3 of the Certification on Form W-9 when the instructions will not be provided to the payee except upon request. 96-26, which is on page 22 of Internal Revenue Bulletin , available at IRS.gov/pub/irs-irbs/irb96-08.pdf. As an independent contractor or freelancer, you’ll receive a W-9 form when you begin your work from the company using your services. Then in January, you’ll receive your 1099-MISC form that documents your annual earnings.

Independent personal services (a term commonly used in tax treaties) are personal services performed by an independent nonresident alien contractor as contrasted with those performed by an employee. Payments made to these individuals may be subject to 30% withholding (nonresident alien withholding rate) unless a lower rate is provided by tax treaty or the law. If you cannot determine whether the payee is a foreign person or a U.S. person, the presumption rules require you to treat the payee as a non-exempt U.S. person and deduct backup withholding. Source Income of Foreign Persons, must be filed if the payer is required to file Form 1042-S. A Form 1042-S is required even if the tax was not actually withheld. For more information on withholding on payments to nonresident aliens, see NRA Withholding, Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, and Publication 901, U.S.


Form 945, Annual Return of Withheld Federal Income Tax, must be filed if the payer is required to deduct backup withholding. For more information on Form 945, see Topic No. 307, Backup Withholding and Publication 15, (Circular E), Employer’s Tax Guide. If you withhold or are required to withhold federal income tax (including backup withholding) from nonpayroll payments, you must file Form 945, Annual Return of Withheld Federal Income Tax. Report all federal income tax withholding from nonpayroll payments or distributions annually on one Form 945.

  • This is a legal document, so it’s important to read and follow all instructions carefully.
  • Backup withhold on any reportable payments if the payee makes a withdrawal from the account after the close of 7 business days after you receive the awaiting-TIN certificate.
  • And, if you hire independent contractors in your business you likely should ask for completed W-9 forms from these people.
  • However, the nature of the recipient are very different.
  • All payees listed in items 1 through 4 and 6 through 11 are exempt.

You send it to the employers who have requested it from you. Again, keep your safety in mind when completing and sending a W-9. Before you even fill it out, verify that the request for your form is legitimate.

Is a W-9 Used for Self-Employed Individuals?

If someone asks for a completed Form W-9, it’s usually for a good cause. Be skeptical of requests where you’re not sure why your information is needed or who is making the request. It is expected that requests as part of normal business operating activities will be fulfilled.

In addition, there are penalties and fees for intentionally failing to furnish correct information or misuse of TINs. However, in some cases, individuals who become U.S. resident aliens for federal tax purposes are not eligible to obtain an SSN. This includes certain resident aliens who must receive information returns but who cannot obtain an SSN. As an independent contractor, vendor, freelancer or other individual receiving nonemployee compensation, you typically do not work for the person or business as an employee.

Who is required to fill out a W-9?

First, the payor is required to begin withholding taxes from future payments. You may cross out item 2 if you’re filling out Form W-9 in connection with a real estate transaction. Item 2 doesn’t apply in this case, so it doesn’t matter if you’re subject fedex w9 to backup withholding. Form W-9 tells you to cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return.

A taxpayer can also be subject to civil penalties for providing incorrect information that leads to incorrect withholding. If the taxpayer makes a false statement that results in no backup withholding, they’re subject to a penalty of up to $500. Penalties get worse upon further non-compliance, as the taxpayer can be subject to criminal penalties in certain cases.

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