How Often Do W9s Need To Be Updated

I'grand a freelance writer—a career independent contractor—so I've come to know Grade Due west-ix very well. And as far as revenue enhancement paperwork goes, it'south by far my favorite!

When I'm filling out Course Westward-9, it's because I've won a new customer. The form gives me an piece of cake way to submit all my vital data to the client so I can showtime working, and they can first paying me. What's not to like about that?

What is a Westward- nine tax course? What is the purpose and use of the W-9 Grade?

Form W-9, Taxpayer Identification Number and Certification, is primarily used to provide the information your client needs to issue yous a Form 1099-MISC at the cease of the year. Form 1099-MISC documents non-employee compensation and other types of income. Information technology includes information like to that found on a Form West-2, Wage and Tax Statement.

A company or individual may also asking a Due west-9 from you for real estate transactions, mortgage interest payments, acquisition or abandonment of secured property, cancellation of debt, or your IRA contributions. Those are less common, however.

Commonly, the party requesting a W-ix Taxation Grade will provide a blank one for you to fill up out. You tin can also easily download the form from the IRS website. Only the party that requested it needs a re-create. The IRS does non.

The W-9 asks for five pieces of information: your name, business proper name (if applicative), address, taxpayer identification number, and the type of business organisation entity yous operate. It's pretty painless equally far every bit tax paperwork goes.

Form W-ix vs Grade W-4

The business you work for must classify you every bit an independent contractor or an employee. If you're an independent contractor, the visitor should request a Form W-nine from y'all. If y'all are an employee, they should ask you lot to complete Form W-4 so they can withhold payroll taxes.

Under a Due west-9, the company will not withhold whatsoever taxes for you lot. You are responsible for ensuring the right amount of taxes are paid to the IRS. And when it comes to Social Security and Medicare taxes, y'all accept to pay both the employer and employee'southward share.

Information technology tin exist a petty disruptive to differentiate whether y'all should make full out Form W-nine or Class W-4 based on the actual piece of work performed. A better gauge is the circumstances around the working relationship. Generally, the more command an employer exerts over what a worker does and how they practise it, the more than likely that person is an employee and not an independent contractor.

Some other quick way to tell is to determine whether the business aspects of the relationship are controlled by the payer. That includes how the worker is paid, whether expenses are reimbursed, which political party provides tools, supplies, etc.

If the employer controls those details, the worker is more likely an employee. If employee benefits are offered, like pension plans, paid holiday, and matching 401(chiliad) contributions, the worker is probably an employee.

Sometimes an employer might try to save coin by classifying an employee every bit an independent contractor. By doing so, they aren't on the claw for paying their share of Social Security and Medicare taxes on the employee's income. But, if that happens to you, your employer's "savings" will come out of your pocket. That's why it'south important to address the state of affairs swiftly if information technology arises.

Common questions about Form West-9

• You must send a new Due west-nine to active customers or clients whenever your data (name, concern proper noun, address, or Social Security number) changes.
• By law, you are but obligated to provide a Due west-9 to parties that intend to pay you involvement, dividends, non-employee compensation, or any other type of reportable income. If someone unexpected asks for a Due west-ix, inquire them why they need information technology. If their respond doesn't align with any valid reason, yous legally don't have to provide one.
• If a business organization accordingly requests a W-9 and y'all do not submit one, you'll probable exist field of study to fill-in withholding up to 28 percent on your payments.

Watch out for red flags

Although it'southward a basic and widely used revenue enhancement document, that doesn't hateful you should accept whatsoever less care with handling Grade Westward-nine than you would handle other taxation and financial documents. Here are a few things to look out for:

• The person or business asking you for a W-ix seems shady. In general, y'all should be careful giving out sensitive information similar your name, address, and Social Security number. Brand sure yous're reasonably comfortable with the person or organisation asking for a W-9 before yous supply that information.
• Use only secure channels to transport a Westward-9 taxation grade. If you choose to e-mail Form Due west-9, make sure to ship it as an encrypted attachment. You can as well utilise another secure delivery method, such as hand delivery or regular post.
• The purpose of a Westward-nine request is unclear.If you're not certain why the requestor wants a Form W-9 from you, ask them what taxation documents they'll use information technology to ready for you.
• You thought you lot were getting a Form W-4. If you're starting a new job and the employer wants a West-9 instead of a Due west-4, clarify whether you're an employee or contained contractor. Information technology'south against the law for them to require you lot to work like an employee only pay you lot like a contractor.

Special Course Due west-9 information for Limited Liability Companies

• If the revenue enhancement status of your Express Liability Company (LLC) is separate from you,

  such as a partnership, C-corporation, or S-corporation, list the LLC proper noun, its federal employer identification number, and check the appropriate tax classification box on the Westward-nine tax course. Do not bank check the "express liability company" box.

• If the LLC is endemic by another LLC, check the "limited liability company" box. Also, indicate the tax nomenclature of the parent LLC.
• If the LLC is owned by a single person, listing the name of the owner on the "name" line and the proper noun of the LLC on the "business concern proper noun" line. The Internal Revenue Service (IRS) would rather have the owner's Social Security number instead of the LLC's federal employer identification number.

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Source: https://blog.taxact.com/everything-you-need-to-know-about-form-w-9/

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