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 similarly offers other personally recognizing details like your name and address.
The form works as an arrangement through which you, as a licensed contractor or freelancer, are accountable for keeping taxes from your earnings. When you’re a full-time worker, your service provider 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 in which withholding for licensed contractors.
W9 Form Pdf 2020 Page 1 Only
Unlike what they do for their employees, businesses manage 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. Businesses need not 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 taken care of very 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, supposing that the company asking for your Form W-9 is your employer and classifies you as an employee instead an independent contractor, then there’s a reason to worry. The difference is considerable.