The information is used to fill out Form 1099 and is used for independent contractors, freelancers, or unrelated vendors, but not employees. A Form W-9 must be completed by one party and furnished to a second party if the second party is going to furnish specific types of payments in the future. Most broadly, Form W-9 must be filled out by independent contractors that perform work for another party with which they are not employed. This includes freelance workers or gig employees under non-employment structures. The Limited liability company box is for a Partnership or LLC business with multiple members.

The backup withholding rate is 24% for reportable payments. If you’re an employee, your employer will withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on your wages. Instead of filling out a Form W-9, new hires are often asked to fill out a W-4 to provide their taxpayer information to their employer. The Department of the Treasury and the Internal Revenue Service issued final regulations amending the rules for filing returns and other documents electronically (e-file). These regulations affect filers of many types of returns including information returns (for example, Forms 1099) and withholding tax returns (for example, Forms 945 and 1042).

Should I Enter My EIN or SSN on Form W-9?

These are the options for which box you should check on line 3. Depending on your circumstance, select the most appropriate federal tax classification on line 3 for the name entered on line 1. Return your completed Form W-9 to the business fedex w9 that asked you to fill it out. Ideally, you’ll deliver it in person to limit your exposure to identity theft, but this method often isn’t practical. In this optional step, you can provide the requester’s name and address.

If you receive a 1099 form stating you’ve had taxes withheld through backup withholding, be sure to report this as federal income tax withheld on your income tax return. If your entity is exempt from backup withholding, you’ll fill in the first line with your code. However, if your business is not, the company that hired you for your services will need to withhold income tax from your pay at a flat rate of 24% and send it to the IRS. The Foreign Account Tax Compliance Act (FACTA) appears on the second prompt of the Exemptions line.

W-9 form 2023: What’s new

Use Form 1042 to report tax withheld under chapter 3 on certain income of foreign persons, including nonresident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts. Also use Form 1042 to report tax withheld under chapter 4 on withholdable payments. You can usually prevent backup withholding by supplying the correct information when requested and paying an appropriate amount of taxes each year.

• Payments that are not subject to information reporting also are not subject to backup withholding.
• When you begin working with a contractor or freelancer that you will be paying, you should request that the contractor complete a Form W-9 prior to starting any engagement.
• If completing your W-9 as a business, use this line to provide the information.
• A payor must remit to the IRS all monies withheld from reportable payments based on a certain deposit schedule.
• When you are hired as a contractor for a business or beginning work as a freelancer, you may be asked to complete a W-9 and provide it to the business that will be paying you.
• The IRS will send you a notice if the payee’s name and TIN on the information return you filed don’t match the IRS’s records.

The IRS may send you a letter regarding backup withholding. This might have happened if you didn’t report all your interest and dividends on a previous tax return. If you haven’t received this letter, and if you provide your tax identification number to the requester of Form W-9, then you are not subject to backup withholding. If you are subject to backup withholding, cross out item two in Part II of Form W-9 before submitting it. If you’re an independent contractor, an employer of your services won’t take care of these things.

Who Must Complete a W-9 Form?

You will still have to report your earnings to the IRS, and the companies that use your services will have to report those earnings, too. The IRS will send you a notice if the payee’s name and TIN on the information return you filed don’t match the IRS’s records. (See Taxpayer Identification Number (TIN) Matching next.) If you receive a backup withholding notice, you may have to send a “B” notice to the payee to solicit another TIN.