What is a W9 is a question on many taxpayer's minds. This is a guide to the popular tax form for independent contractors.
A W9 form is one of the tax forms required by the Internal Revenue Service (IRS) for income reporting. Individuals and companies who are providing contract services for a company usually receive blank W9 forms to fill out. These forms are rather simple to complete, but must be filled out accurately to avoid unnecessary payment errors and even incorrect calculation of tax liability.
Taxpayer Identification Number
One of the most confusing terms to self-employed works on form W9 is the terminology Taxpayer Identification Number. However, this simply means Social Security Number (SSN) or Employer Identification Number (EIN.) Individuals who do not own a company usually write in their Social Security Number on a W9 form. People who run a company or want to be paid under their Doing Business As (DBA) name will enter their Employer Identification Number. This enables them to legally receive payment as a company, rather than as an individual. Always fill out a form W9 promptly so you can receive accurate and timely payment for your services.
Another confusing form W9 term deals with backup withholding. Virtually every taxpayer can say they are not required to have backup withholding. When someone is required to have backup withholding, they are notified by the IRS. This means that 28 percent of income, even self-employment income, is held from their checks at IRS order. This applies to people who owe back taxes. In addition, the IRS can require backup withholding when the information on form W9 appears incorrect. If your name and Social Security Number do not match, then the IRS will likely order 28 percent of your self-employment income held until the situation is rectified. Common misspellings and marriage name changes can easily lead to mistaken backup withholding, so it is especially important to fill out a W9 form accurately and print clearly to avoid any misunderstandings.