If you’re self-employed as an independent contractor or freelancer, you’ve likely needed to complete Form W-9, which is different from Form W-4 that employees fill out. If you’ve earned interest from a bank or dividends from a mutual fund, you’ve probably also encountered the W-9 form.
As its name implies, the W-9—the Request for Taxpayer Identification Number and Certification—asks for identifying information such as your name, mailing address, and taxpayer ID.
Unlike with many other tax forms, you don’t send your completed W-9 to the Internal Revenue Service (IRS).
Instead, you send it to the person or institution with whom you have a financial relationship, be it a business owner who hires you to do freelance work or the bank where you have an interest-earning account. They will use that information to fill out 1099 tax documents, so the IRS knows how much money they paid you. The appropriate 1099 form must be postmarked by January 31st (or the following Monday if the 31st falls on a weekend) so you should receive it no later than the first week in February. You’ll need to file the 1099 with your taxes, too.
As you can see, the W-9 is important for everyone. Also, there are penalties for not filing 1099s correctly and on time. Penalties range from $50 to over a million dollars, depending on the amount of gross receipts and how late it is. It pays to get this right!
Here’s what else you need to know about the IRS form W-9 and how to complete it accurately.
Do I need to fill out a W-9 form?
If you’re an independent contractor, you’ll need to fill out a W-9 for each client for whom you invoice $600 or more in the given tax year. A W-9 reflects that you’re responsible for your own income taxes and your payer will not be withholding them since you’re not an employee. There are also other situations where you have to fill out a W-9 form.
For example, the W-9 will come into play if you:
- Have proceeds from real estate transactions
- Paid mortgage interest
- Paid student loan interest
- Have canceled debt
- Earned interest from a bank
Head over to the IRS website for the full list.
How to fill out a W-9 form
1. Download the W-9 form from IRS.gov
Although you’ll often be supplied a copy of the form, you can also download the form from the IRS website yourself. It’s a one-page form with four pages of IRS instructions. It’s always a good idea to reference the IRS information or call your CPA, Enrolled Agent or tax professional for the fine print. For most of us though, the W-9 is pretty straightforward. We’ll walk you through it.
2. Provide your full legal name and business name
Line 1 of the form will ask you for your legal name.
If you are an individual, sole proprietorship, or single-member LLC (limited liability company), you should enter your own name as shown on your individual tax returns. If you have a separate business name or “doing business as” DBA name, that information will go on line 2.
If your business is a partnership, multi-member LLC, C corporation, or S corporation, you should use your entity’s legal name.
3. Describe your business structure
Next, select the business structure in line 3 that matches your situation. This is so the IRS knows how you’re classified for tax purposes. This should directly correlate with the federal tax form you complete annually for your business.
Most individuals and business types do not have to fill out anything in box 4, unless you have to add exempt payee or FATCA reporting codes. (The latter relates to foreign account holdings and following the Foreign Account Tax Compliance Act.) You may need to if your business is structured as a corporation though, so make sure to double-check with your tax accountant.
5. Enter your mailing address
Lines 5 and 6 are straightforward: write down the mailing address where you want to receive important tax information.
If you’re filling out the W-9 as a freelancer, your client will use this address when they prepare your 1099-NEC for the nonemployee compensation you earned, which is essential for filing your taxes accurately.
If you’re filling out a W-9 for miscellaneous income (such as for receiving prizes), this address is where you’ll most likely receive Form 1099-MISC, whereas the 1099-DIV is sent by banks and other financial institutions to report dividends.
6. Add any account numbers
If your client(s) give you a unique account number to identify you, it could be added to line 7. lt’s also optional to provide the requester’s name and address in the corresponding box, which can help you track who you’re giving your giving your tax identification number out to, along with the number of clients you’re filling this form out for (one for each client).
7. Provide your Social Security number or Employer Identification Number
Next, move down to Part I. This is the main point of the form, the spot where you need to enter your Taxpayer Identification Number (TIN).
Typically, you either use your Social Security Number (SSN) or your Employer Identification Number (EIN). It all depends on your business structure for federal tax classification that you entered in the appropriate box at the top of the form, but regardless, you need to enter the correct TIN for the information return.
|If you are…||Enter your||Unless|
|A sole proprietor||SSN or EIN|
|The owner of a single-member LLC that is taxed as a disregarded entity||SSN||If you personally have an EIN, you can use that as well. But don’t use your LLC’s EIN.|
|The owner of an LLC that is classified as a S or C corporation or a partnership||EIN|
|The owner of any other type of business entity||EIN|
8. See if you need to sign and date the form
Part II is the certification part of the form. Now, this last part of form W-9 is funky.
If the IRS has told you that you are subject to backup withholding, you’ll need to cross out #2. Otherwise, leave that part alone. (Most people are tax-exempt from it.)
Technically, you could be done with the W-9 form at this point. That’s because you don’t need to sign Part II in many situations.
The IRS only requires you to sign the W-9 if you’re completing it because of:
- An interest, dividend, broker, or barter exchange accounts opened after 1983
- A broker account considered inactive during 1983, or
- A real estate transaction
However, the IRS also allows the form W-9 requester to require you to sign it. This is often requested to confirm that you are indeed a US person or resident alien. (Note: If you aren’t a US citizen or resident alien and you are asked to provide a W-9 form, you should complete Form W-8BEN instead and provide your Individual Taxpayer Identification Number or ITIN.)
If you do sign it when you don’t need to, that’s generally okay, too—unless the statements are not true. Once you have completed the form and reviewed it for accuracy, submit it to your client(s) or the institution that needs it. Since it has important identity information, make sure to only send it to people and institutions you know and trust.
Quick note: This is not to be taken as legal or HR advice. Since employment laws change over time and can vary by location and industry, consult a lawyer or HR expert for specific guidance. Learn about Gusto’s HR services here.