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W-9 Form

If you work with contractors, gig workers, or freelancers, you’ll want to understand IRS Form W-9. Paperwork is the worst, and official forms can be especially intimidating—but the W-9 doesn’t have to be. This article will help you understand the requirements for the form, when you need to use it, and why it’s important for your business.

What Is a W-9 Form?

The W-9 Form is the Request for Taxpayer Identification Number and Certification. The purpose of the form is to get important information from your contractors, such as name, mailing address, Social Security Number (SSN) or Employer Identification Number (EIN) and business organization classification.

Completed W-9 Forms are not filed with the IRS, but should be kept in your employee files. The information on these forms simply helps you collect the correct information on all workers so that you can accurately report income payments to the IRS.

The Difference Between W-9 and 1099 Forms

The difference between these two forms is simple. The W-9 is the form contractors complete to provide information you need for paychecks and their 1099. The 1099 is the form you complete to report that contractor’s yearly earnings.

Why Are W-9s Important?

Because W-9s are not filed with the IRS, you might be wondering why getting one from all of your contract employees is so important. There are a couple of good reasons to request W-9s upfront.

  • Collecting Information – Contractors, freelancers, and gig workers come and go, and collecting accurate information means you won’t have to track them down later.
  • Completing Form 1099-NEC – W-9s collect the information you need to prepare each contractor’s 1099-NEC form at the end of the year when reporting payments to the IRS.

Who Is Required to Complete a W-9?

Technically, the W-9 Form is not required because it is not filed with the IRS. It’s really a helpful tax preparation tool for you. The W-9 should be filled out by your contract employees to ensure that the information is accurate. You should request a completed W-9 for any contractors, freelancers, gig workers, or vendors that:

  • Earn more than $600 annually
  • Are not on your official payroll
  • Do not have taxes withheld from their pay

Some examples of workers that may fall within the guidelines for W-9 and 1099 include freelance writers, graphic designers, web developers, attorneys, electricians, plumbers, hair stylists, financial advisors and business coaches.

When You are Required to Have a W-9

Again, the W-9 is not a required IRS form and it is not filed officially with the IRS. You are encouraged to request a completed W-9 from every contract worker or business at the onset of their project. Once a project is complete, it is difficult to track down a contractor to get the necessary information on the W-9.

Since the W-9 is a helpful preparation tool for Form 1099-NEC, it is a good idea to have these completed by January 31st, the IRS deadline for reporting Nonemployee Compensation (Form 1099-NEC).

How the W-9 Should Be Filled Out

Although a W-9 should be completed by the contracted worker to ensure accuracy, it helps for you to know the steps and requirements should they have difficulty completing the form. Thankfully, the form is pretty straightforward.

Step 1: Naming

At the top of the form, the worker fills in their name (and the name of their business, if it is different than their own name). It is important that the name on this form matches the name on their federal income tax return.

Step 2: Tax Classification

Next, they check the box for any appropriate tax classification. Most individuals check the sole proprietor box and use their SSN in Part I, but if there is any confusion for the contractor, they should consult a tax expert.

Step 3: Address

The worker fills in an address for themselves or their business.

Step 4: Taxpayer Identification Number

Next, they complete Part I by supplying their Taxpayer Identification Number, which is either their Social Security Number or an Employer Identification Number. This part of the form might be confusing for some contractors, and it’s best to advise them to seek professional help for their business taxes.

Step 5: Certification Acknowledgement

The final step of the form is to read the certifications and instructions for Part II. The worker then signs and dates the form acknowledging the certification, and returns the form to you.

Note: If a contract worker strikes out the second item under certifications in Part II, Backup Withholding (BWH) is required. The IRS will contact your contract worker directly up to four times to correct the reason for BWH before contacting you directly to begin BWH on future paychecks. If you do not withhold the backup amount, you may be held responsible for the amount not collected.

Sample W-9 Form

Below is a sample W-9 for your convenience. Be sure to review the sections you will need in order to complete the worker’s 1099-NEC, and familiarize yourself with the pages of IRS instructions included.

Check out the form here.

The Form W-9 is a straightforward tool to help you keep track of important information about your external workforce. Even though you are not required to use the form, it is good business practice to obtain and retain this information from your contracted workers so that you can complete their1099-NECs accurately and on time.

Questions You’ve Asked Us About W-9 Forms

What should I do with a completed W-9?
All completed W-9s should be kept on file for active and non-active workers. It is a good idea to hold on to these forms for three years. You can store them electronically or retain paper copies.
How should our W-9s be stored?
Because each W-9 contains personal information such as SSNs and addresses for your contract workers, you should always keep them safely locked away. Paper copies should be locked in a filing cabinet and electronic forms should be encrypted with a password.
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