For those that are independent contractors, as well as for people that work for themselves, a W9 Form is wanted to report their Social Security Number or Business Tax Identification Number to their clients. This is a pretty cut and dry bit of paper when it comes to government forms. You’ll simply need to provide your name, your address, as well as your Social Security Number (or your Employer Identification Number, for those who are contractors and are therefore considered another business entity all their own).
Besides the above info, an IRS W9 Form will also ask whether or not you are subject to backup withholding. What’s “backup withholding,” you may ask. Well, that is withholding at a fixed rate of twenty-eight p.c on payments made to you or your business under certain circumstances. There are 2 common reasons for using backup withholding. 1 explanation is if your name and Social Security Number doesn’t match the name and Social Security Number that the IRS has on file for you. Another reason would be if you have outstanding tax debt. In this example the IRS would have told you you are subject to imperative backup withholding until the outstanding tax debt is completely paid for.
During the tax season of the year, contractors will be getting W9 forms to complete. Since during that time of the year, clients are getting ready to send out their 1099 forms. The 1099 Form is used to report self-employment revenue.
Other places you may be getting a W9 from are brokers and finance establishments. They might ask for a W9 if you will earn interest revenue, dividends, or trading stocks and other instruments. As well as the common places a few people may receive requests for the W9 form from more peculiar places like landlords and other folks or businesses. This is utilized to ask, officially, from someone or business their name, address, and taxpayer identification number for the requesting party to correctly issue tax documents to the IRS.
As a rule, any sort of business that requests a W9 Form is one that pays you interest, in general, the types of businesses that request Form W-9 is any business that pays you reportable revenue. However if you should happen to feel that you have received this form from a weird source you should ask them why they’re requesting the form and what they’ll be using it for.
What about foreign subcontractors? With foreign subcontractors A W9 is not required, it is just wanted to gather info from US people and companies. However if you’ve got a foreign contractor that is working for you, they will most probably be required to fill out one of the various W8 Forms.