The IRS Form W-9 is used to collect information about independent contractors and freelancers in the US. Companies use it to protect identifying information and financial institutions use it for interest and dividends. The form should be completed, signed, and returned to the requesting company, and a new one should be completed if there are any changes. The contractor provides their full name, business name, type of organization, address, and social security number or EIN. They also certify that they are not subject to withholding tax.
The Internal Revenue Service (IRS) Form W-9 is usually used to gather pertinent information about an independent contractor or freelancer from the United States. This form provides an official way for companies and business people to protect identifying information about people who pay. Companies use the information they collect when they submit required forms to the IRS and provide information forms to the contractor. A company that hires independent contractors keeps one of these forms on file for each contractor. Financial institutions that pay interest and dividends also sometimes use the W-9 form.
The correct way to use a W-9 form depends on the role of the person using it. If a business hires independent contractors or freelancers, it provides a blank copy of the form to each contractor it hires. Once the contractor fills it out and returns it to the company, it is kept on the company’s file system. If the contractor relocates or undergoes other changes, including a name change, they should complete a new W-9.
If the person using the W-9 is an independent contractor or freelancer, their job is to complete the form, sign and date it, and return it to the company that requested it. This involves providing your full name as listed on your tax return and your official business name, if you use one. The independent contractor should also select the type of business organization. For example, a person who is the sole owner of her business or a lone freelancer usually checks the individual/sole owner box. There are also checkboxes for corporations, partnerships, and limited liability companies.
Next, the contractor provides his full address and social security number. If you have an Employer Identification Number (EIN), you can provide it instead of a Social Security number. If the individual is exempt from the backup withholding, he will also check the box labeled “Exempt Beneficiary”.
The next step in completing the W-9 form is to sign it. When a person signs this form, he certifies that he is not subject to withholding tax. If a person is subject to withholding, the company that pays him the money withholds 28 percent of his money on behalf of the IRS. This can occur if there is a discrepancy between the information provided on the form and the IRS records. An individual may also receive withholding money if he owes back taxes and has been notified that he is subject to reserve withholding.
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