What is a Form W-9?
A Form W-9 (sometimes miswritten as a Form W9) is a document issued by the United States Internal Revenue Service (IRS) for certain taxation purposes. While W-9's aren't filed with the IRS, they should be collected by clients or companies that hire independent contractors, or freelancers. W-9's are also used for earnings received by financial institutions. Employees are not required to fill out a W-9.
A W-9 is used to gather information about the independent contractor. The form requires information as to the freelancer's name, address, and social security or tax payer identification number. A substitute Form W-9 may be developed if it is substantially similar to the actual Form W-9. Check the IRS's instructions for the Form W-9 for more details on this.
The client or company will use the information collected on the W-9, or substitute W-9, to produce a Form 1099 which details the earnings that the independent contractor received from that client that tax year. The Form 1099 is sent to both the independent contractor and the IRS; some states may also require a separate mailing of the 1099 as well.
Unlike the Form W-4, which employees use to authorize an automatic tax withholding from their paychecks, the W-9 does not withhold taxes or social security payments. Independent contractors are solely liable for the full amount of taxes assessed to earned income. Therefore, independent contractors are typically required to submit quarterly estimated tax payments to the IRS and possibly their state tax board as well. The Form 1040-ES is used to submit such quarterly tax payments to the federal government.
The W-9 is only required of independent contractors who are US citizens, US resident aliens, and some other less common categories (e.g., a domestic estate). Non-US independent contractors may be required to fill out a Form W-8 (like the Form W-8BEN) instead of a W-9. This is not always the case. Investors, or freelancers, living in other countries may simply file the W-9, which will provide the employers or financial institution with a way to keep record of their information.
The W-9 also requires a signature, though unlike the W-4, the signature does not have to be witnessed by an employer or client. In most cases, freelancers merely send in a W-9, which can be a copy of the original.
Most employers must only have a record of a W-9 form if the money they will pay to a freelancer exceeds 600 US dollars (USD) yearly. For lesser amounts the form may not be required. W-9's and other tax forms and instructions can be downloaded directly from the IRS's website.
Written by Tricia Ellis-Christensen
