Summary: The W-9 Form needs to be submitted to provide essential information about independent contractors and, where necessary, inform creation of a 1099 form.

When a new person applies, interviews, and gets hired for a job, their employer typically collects a lot of their personal, tax, and banking information during their onboarding process. The employer needs to know the details of who they’re hiring so they can add them to their payroll, pay them their wages, and register them with the appropriate government authorities.

However, what if that person isn’t an employee but is instead a freelancer, independent contractor, or gig worker? How does the business engage them to get their information for payment and tax purposes? It turns out that there is a formal way to collect information in these types of cases.

We’re going to explain how to use Form W-9 for this purpose and clarify the roles of payers and payees in filling this form out.

What Is a W-9 Form?

Form W-9, Request for Taxpayer Identification Number and Certification, is an Internal Revenue Service (IRS) form used by individuals and entities to ask for tax identification numbers (TINs) from the people and entities they do business with. The requester of the W-9 generally needs to obtain tax ID numbers so they use them to file information returns with the IRS.

This form is normally given by a requestor to a payee with a formal request to fill it out and return it. The person filling out the form returns it to the requestor where it is kept on file and used for informing the IRS. The form itself should not be filed with the IRS, however.

What Is Form W-9 Used For?

The purpose of Form W-9 is to collect and certify tax identification information. A requestor who may be an entity or an individual needs a taxpayer identification number so they can file an information return.

Their reasons for these returns can include having paid the requestee’s income, canceled their debt, received mortgage interest from the requestee, as well as identifying contributions made to an IRA (Individual Retirement Account) by the requestee.

Form W-9 also lets the requestee certify the following:

  • They are not subject to backup withholding
  • They are exempt from backup withholding
  • They are exempt from FATCA (Foreign Account Tax Compliance Act) reporting
  • Their non-foreign status

By certifying their tax numbers and obligations, payees make it easier for their payers to proceed with information reporting compliantly.

Backup Withholding

Backup withholding is when payers are required by the IRS to withhold parts of payments at the rate of 24% and remit these withholdings to the IRS. This can be required by the IRS for several reasons. A payee may not have given their TIN to a requestor or not certified it, or the IRS may find that the TIN is incorrect.

Backup withholding may also be required if a payee did not report all of their interest and dividends on their tax return, and the IRS believes it’s necessary to withhold parts of payments to recoup what is owed.

When Is Form W-9 Needed?

Form W-9 should not be used by foreign persons or entities (they should use Form W-8 instead) or qualified foreign pension funds (they should use Form W-8XP). W-9s are only for US persons which include citizens, resident aliens, partnerships, corporations, companies, associations, domestic trusts, and domestic estates. 

In general, a requestor needs to use a W-9 to obtain a TIN if they need to file an information return with the IRS. The most common of these returns, the 1099-NEC, is used to report payments to independent contractors and other non-employees. Other relevant information returns include:

  • 1099-DIV (dividends, including from stocks or mutual funds)
  • 1099-INT (interest)
  • 1099-MISC (prizes, awards, gross proceeds, and various other types of income)
  • 1099-NEC (nonemployee compensation)
  • 1099-A (acquisition or abandonment of secured property)
  • 1099-B (stock or mutual fund sales)
  • 1099-C (canceled debt) 
  • 1098 (home mortgage interest) 
  • 1098-E (student loan interest)
  • 1098-T (tuition) 

These forms can be filled out without obtaining TINs, but this can cause issues and normally require them to perform backup withholding.

Who Fills Out Form W-9?

A Form W-9 can be used by an employer, payer, or other entity to request information. It is given to a person or entity to fill out so they can provide their TIN, name, address, and certification of their information. Once this is completed, the form filler returns the W-9 to the requester.

How to Fill Out Form W-9

If you’ve been presented with a W-9 to request your TIN, you can fill it out easily. The form is only one page long and is made up of three sections: Information, TIN, and Certification. Here’s what to fill out in each section.

Information Section

The information section includes numbered boxes as follows:

  • Box 1: Enter the full name of the entity or individual. For sole proprietorships and disregarded entities, write only the owner’s name.
  • Box 2: Enter the business or disregarded entity name if different from the name in Box 1.
  • Box 3a: Tick a box to indicate the federal tax classification of the entity or individual named in Box 1. For LLCs, indicate the type and tax classification code (C, S, or P).
  • Box 3b: If you indicated a partnership, trust/estate, or LLC in Box 3a, tick the box if you have foreign partners, owners, or beneficiaries. 
  • Box 4: If you are exempt from backup withholding or FATCA reporting, write your exemption codes in the blanks.
  • Box 5: Enter the street address of the entity or individual named in Box 1. The requestor will mail information returns to this address.
  • Box 6: Give the city, state, and ZIP code.
  • Box 7: Provide account numbers for receiving payments if desired.

Finally, there is an unnumbered box at the bottom right of this section where you can write the requestor’s name and address if desired. The requestor may have already provided this information to you before giving you the form.

Part 1: Taxpayer Identification Number

The second section of the W-9 form is confusingly labeled Part 1. This is where you will indicate your Taxpayer Identification Number. Individuals should enter their Social Security Numbers (SSNs) here.

Sole proprietors with both SSNs and EINs (Employer Identification Numbers) can enter either in this space. A single-member LLC, which is a disregarded entity and legally separate from its owner, can enter either the owner’s SSN or their EIN. For C- or P-type LLCs, the entity’s EIN should be entered here.

Finally, resident aliens not eligible for SSNs can enter their ITINs (Individual Tax Identification Numbers) in this space. ITINs can be obtained by filling out Form W-7, Application for IRS Individual Taxpayer Identification Number with their last tax return.

If you don’t have a TIN, you can apply for one and then enter the words “Applied For” in this space instead of a number.

Part 2: Certification

The final section of Form W-9 is the certification section, where you simply sign the form where it says “Signature of U.S. person” and date it. While this is a simple task, it’s also a serious matter as you must make a truthful statement here or risk being penalized for perjury. 

By signing the form, you certify that:

  1. The TIN given on the form is correct, or you are waiting for a TIN
  2. You are not subject to backup withholding, or you are exempt,
  3. You are a US person (citizen, entity, or other person), and
  4. You have given the correct exemption codes to show that you are exempt from FATCA reporting.

If you are, however, subject to backup withholding, you can still use this form and certify it. You simply need to cross out Statement 2 in your certification if you have been notified by the IRS that you are subject to backup withholding.

Submitting Form W-9

When you have completely filled out for W-9 and signed and dated it to certify it, you can return it to the requestor. You can either mail it to them or deliver the form in person.

If you mail it, be sure to let the requestor know when you put it in the post so they will know when to expect to receive it and thus meet their own tax reporting deadlines with the IRS. Entities that must perform information reporting to the IRS can be fined if they submit their reports late.

Form W-9 for Providing and Certifying TINs

If you’re a contractor who needs to receive payments from an employer, or if other people or entities need your tax identification number, they’ll ask you to fill out and submit Form W-9.

This form lets you give them your personal information and your TIN so they can make information returns to the IRS. You need to fill out this form and return it to the requester so they can use the information you provide to report to the IRS compliantly.