A W-9 tax form, officially called "Form W-9, Request for Taxpayer Identification Number and Certification," is an IRS document used primarily to confirm a person's or business's name, address, and taxpayer identification number (TIN). This form is commonly used in business-contractor relationships where companies request this information from independent contractors, freelancers, or self-employed individuals who are paid $600 or more to report their income accurately to the IRS. The key purposes of the W-9 form include:
- Providing the correct taxpayer identification details for income reporting.
- Helping the requester prepare and file tax forms such as Form 1099, which reports income paid to non-employees.
- Certifying that the individual is not subject to backup withholding, which is a tax withholding on certain payments.
The W-9 form is not sent directly to the IRS but is kept by the requester for verification and used for reporting income paid to the IRS. Failure to provide a W-9 when requested may lead to backup withholding, where the payer must withhold a percentage (24%) of the payments for tax purposes. It applies mainly to independent contractors, freelancers, and gig workers but can also be used in other tax-reportable situations such as real estate transactions, mortgage interest reporting, dividends, and more. Importantly, the W-9 differs from the W-4 form, which employees fill out for wage withholding, as the W-9 does not set up withholding but is for information reporting and certification only. In summary, the W-9 form is a crucial document for collecting accurate tax information from payees to ensure correct income reporting and tax compliance. It acts as a formal request and certification of the taxpayer's information for tax reporting purposes. This explanation draws from trusted sources including the IRS, Investopedia, TurboTax, and H&R Block.
