The title of Form W-9 is formally Request for Taxpayer Identification Number and Certification. Firms utilize this form to acquire the Taxpayer Identification Number (TIN) from licensed contractors, suppliers, and freelancers. The form additionally delivers other personally recognizing details like your name and address.
The form functions as an arrangement in which you, as a licensed contractor or freelancer, are accountable for keeping taxes from your earnings. When you’re a full-time worker, your business keeps some of your earnings to cover federal earnings taxes and FICA taxes (which consist of Medicare and Social Security taxes). Service providers do not make through which withholding for licensed contractors.
Fill Out A W9 Form Online 2020
Unlike what they do for their employees, businesses handle independent contractors differently. Their earnings taxes are not withheld, and contractors are entitled to pay for their Social Security taxes or Medicare. These responsibilities aren’t the employer’s responsibility. Whatever the case, the IRS needs to know the exact amount these contractors pocketed, to ensure they pay the taxes they deserve to. The 1099-MISC is a vital resource here. It’s used to gather this information. So businesses needn’t send anything to the IRS, not even the Form W-9
When is it best to Fill Out Form W-9.
The unexpected arriving of a Form W-9 form for filling should be dealt with seriously by an independent contractor. Form W-9 is sometimes also used by financial institutions in cases when they need to source information from a customer, to report dividends or interest.
Next, in case the company requesting for your Form W-9 is your employer and identifies you as an employee instead an independent contractor, then there’s a reason to worry. The difference is considerable.