W9 TAX FORM

When the tax season approaches, you may be required w9 tax form fillable, at least, depending on your employment situation. Thus, it is highly advisable to know what a w9 tax form fillable, what qualifies you to complete one, and how to fill it correctly.

What is a W9 form?

A W9 tax form is an IRS tax document in the form of a helpful guide, which helps independent contractors in completing their tax obligations for the calendar year. You can download a blank W9 form, to get a picture of what we are talking about.

Businesses that seek services from independent contractors or freelancers don’t withhold any income tax, Medicare taxes, or Security taxes, as regular employers do. As such, it is up to individual contractors or freelancers to meet those IRS tax obligations. The government, however, still requires organizations that use independent contractors to submit a 1099-MISC form to match the contractors’ tax filings with their yearly tax income.

But generally speaking, W9 forms are used by independent contractors or freelancers, and not by full-time employees, to complete their tax forms. Unlike part-time and full-time employees, independent contractors don’t have taxes withheld for payments of services rendered to their clients.

For instance, a company could hire a freelance designer to build a new website for a fee amounting to $4, 500. When the work is done, and the freelancer’s invoice is submitted, that particular company pays him the full $4, 500 without any taxes taken out. See, it is up to the freelancer to pay his own taxes from the 4,500, usually every quarter. Each year, the sum of the freelancer’s professional earnings is recorded on the w9 tax form fillable and submitted to the IRS.

Data provided on a w9 tax form fillable comes from IRS form 1099, which outlines any income paid out to a person that otherwise would be listed on an IRS W-2 form.

Difference between 1099 and W9

The w9 tax form fillable is used by businesses to record a freelancer or contractor’s information, but it’s not usually sent to the IRS. Instead, 1099 is what businesses and freelancers/contractors will submit to the IRS. Actually, the 1099 form records gross income for the entire tax year.

Difference between the W4 and W9

Freelancers, part-time employees, and Independent contractors responsible for their own tax returns are expected to fill in the W9 form. If you consider yourself fully employed and your employer tells you to fill the W9 form, you should confirm whether the organization views you as a temp or permanent replacement.

Employees working on a permanent basis are expected to fill in the W-4 form, not the w9 tax form fillable. The only time one might be expected to fill the W9 form as a permanent employee is if you have gotten compensation other than the monthly wages. This could be in the form of store vouchers, gifts, or a cash incentive.

Is the W9 form used for tax deductions?

No, the W9 form is only used record information for freelancers and independent contractors, and usually, it not even seen by the IRS. Businesses do not deduct income tax from freelancers or independent contractors, and neither do they pay Social Security or Medicare on their behalf.

Full-time employees are not expected to fill in a W9 form because the company that has hired them should already have the employee’s information on file. At times, a dishonest employer or one that is financially struggling may tell you to fill the W9 form purely to save money. But at least by now, you know that a full-time employee fills out the W4 and not the W9.

The only other time an employer can request you to fill out the W9 form if you are a permanent employee is by mutual consent. Case in point: a situation where you have negotiated to work on your own schedule and take responsibility for personally filing your own tax returns.

What information does the W9 tax form record?

The W-9 tax form is used to record the following info for a freelancer or independent contractor being hired.

• • Freelancer/Contractor name
  • Physical and/or postal address
  • Type of business entity, i.e., partnership, sole proprietorship, trust/estate, S corporation, C Corporation, Limited Liability Company, or “other.”
  • Tax identification number (TIN); either a social security number (SSN) or Employer Identification Number (EIN)

Additionally, you need to specify on the W9 form if you are eligible for backup withholding. If you are, the employer who hires you is required to withhold income tax from your payment, usually at a flat rate of 24 percent for tax years 2018- 2025. The total amount deducted is sent to the IRS.

Who needs to complete a W9 tax form?

It is not just the independent contractor or freelancer who may be subject to a W9 form. Any income earned on real estate transactions, dividends paid out to shareholders, mortgage interest paid by an individual; for instance, need to be recorded on the W9 form.

Here is a brief list of typical candidates for a W9 tax form:

• • Freelancers: They are also referred to as “gig” workers. Freelancers take on short-term gigs as opposed to permanent jobs. Let’s say, a web designer handling digital web project for a client, or a copywriter creating a brochure for a company. These gig workers provide W9 forms to their employers (clients) to fulfill tax obligations.
  • Trade workers: Professional trade workers, like a plumber, electrician, or a landscaper, may also rely on a W9 for their taxes, subject to how they structure their services from a tax perspective.
  • Professional consultants: Consultants usually handle advisory services for businesses and take more of a “big picture” responsibility compared to task-oriented freelancers. They may advise on particular company areas of interest, like sales, marketing, I.T, and finance, and they fulfill their tax obligations via W9 forms.
  • Some corporations and LLCs: The majority of corporate contractors aren’t required by the Internal Revenue Service by file W9 tax forms, as they do not usually receive a 1099 form. However, some corporate contractors – particularly limited liability company (LLC) contractors, need a W9 in the event they file their taxes as an individual entity – and not as a corporation.
  • Financial institutions and their customers: A W9 form may be used by a financial firm to gather specific information about their clients. This is done when the firm pays out interests or dividends to the client. Remember that a W9 2019 tax form requests certain information, including business name, specific exemptions, TIN, recipient’s tax classification, and an address.  Much of this information is asked when a customer is opening an account.

A brief account of how W9 tax form works

• For freelancers and independent contractors and the clients, they work with: Your client will request you to complete and return a W9. On it, you’ll provide your address, legal name, and TIN. You can use your SSN in place of the TIN.

If you earn more than $600 from a client during the tax year, the W9 information will be needed to complete a 1099 form. A 1099 form reports gross income earned. Remember, though, it is always your job as a freelancer to set aside some money aside for your taxes. It’s ultimately your duty, to determine if you need a 1099 form and to ask for one, if necessary. When you earn $600 and below during the tax year from a client, 1099 won’t be necessary. That said; you must still complete your taxes.

• For those who hire freelancers or independent contractors: If you prefer using freelancers or independent contractors, always ensure they complete a W9 form. You should get the form completed by the freelancer every tax year you partner with them so that the Internal Revenue Service doesn’t have a missing form to use a basis for auditing you.

If you have hired someone who has no previous experience as a freelancer, ensure that you explain the significance of returning the completed W9 form to you and not the IRS. It is understandable why someone with no experience would imagine the IRS should receive the form. That is why you should keep on reminding the freelancer to return the form to you.

If the freelancer earnings from you exceed $600 during the tax year, you should report their income using a 1099 form. This form is also available on the official IRS website. After downloading, fill it using the information provided in the W9 tax form. Submit one 1099 copy to the contractor and another to the IRS. The contractor needs the 1099 form so that they can complete their taxes.

How to fill out a blank W9 form

Anyone who needs to file a W9 tax form will receive a blank form from a client before they assume any professional services. Completing a W9 form is simple, but it is good to get it right:

1. Download a blank W9 form from the IRS website. Although your employer will most likely supply you a copy of the W9, you can as well personally download the form here.
2. Provide your legal name and a business name: In line 1 of the downloaded W9 form, input your legal name. Make sure to use your full name. Also, ensure that your name matches the spelling on any tax documents submitted to IRS.  There is also a separate line/box to input your business name. Leave that line blank if you do not have a business name. If you have a DBA name or separate business name, make sure to input that information on line 2.
3. Describe your tax classification: Next, choose the business structure in line 3, which matches your situation. This is to help the IRS know where to classify you for tax purposes. For instance, you can list yourself as a sole proprietor, single-member LLC, or an individual. It is good to note that the majority of business types or individuals do not have to input anything in line 4. However, the IRS also allows you to list yourself as a partnership S corporation, C Corporation, or multi-member LLC.
4. Enter your mailing address: On line 5, input the mailing address where you wish to receive important tax info. If you are filling out the W9 form as a freelancer or independent contractor, your client will use this email address when preparing your 1099-MISC, which is vital for filing your taxes correctly. If you are filling out a W9 form for other reasons, this email address is also where you will receive any extra correspondence. Line 6 leaves a space for you to input the state, city, and zip code of the address mentioned above. Enter your account number on line.
5. Provide your Employer Identification Number (EIN) or Social Security Number (SSN): The next part of the W9 is where you input your Taxpayer Identification Number (TIN). Usually, you either use your SSN or EIN. It all depends on the structure of your business.
   • If you are an individual, enter your SSN.
   • If you are a sole proprietor, you can enter your EIN or SSN.
   • If you own a single-member LLC, which is taxed as a disregarded entity, use your SSN. You can use your EIN here as well. However, do not use your LLC’s EIN.
   • If you own an LLC, which is classified as a partnership or corporation, use your EIN.
   • If you own any other form of business entity, use the EIN.
6. Date and sign the form: Part II is the certification area of the form. If the IRS has specified that you are subject to backup withholding, you should cross out #2. Otherwise, that part should be left alone. Technically, you might be done with your W9 form at this point.

The IRS only needs you to sign the W9 form if you are completing it because of:

• • A broker account deemed inactive during 1983
  • A real estate transaction
  • An interest, broker, dividend, or barter exchange accounts opened after 1983

Also, a date and signature are required in part II to certify that the info you have submitted on the W9 is correct. And remember, because it has crucial identity information, ensure you only send it to institutions or people you know and trust.

The IRS accepts electronic signatures

The W4 and W9 forms may be completed via e signatures, and the IRS regulations around them are reasonable. Minimize printing, signing, and mailing your IRS documents by signing them electronically. Compliant with the Uniform Electronic Transactions Act (UETA) and the U.S. Electronic Signatures in Global and National Commerce Act (ESIGN), e-Sign are legally binding and enforceable in any court of law. They guarantee stronger levels of authentication, and most importantly, have an audit trail attached to the signed documents.

To sign a W9 with most top electronic signature software, follow these steps:

• Register through your email address
• Upload the completed W9 tax form from your device via the “Upload” tab or from the cloud storage of Google Drive or Drop Box.
• When the W9 document is displayed in your account, click Sign.
• Scroll through the W9 form to the part where your signature is needed.
• Choose the type of details to use: text, mouse, loading a signature scan from your computer or a webcam image
• Adjust the size and position of the added signature and click Done

All changes done on the W9 are saved automatically. Also, it is possible to download the signed w9 tax form for reference purposes.

Tips when filing your W9

Follow the following steps to improve your w9 tax form fillable experience:

Keep it safe – After filling your W9 out accurately, make sure you protect your identity from fraudsters. Always keep the form private, and never leave it in a public place or send it to somebody in an unsecured way. Tax documents fraud is all too real, and securing them should be your topmost priority.

Keep your W9 form up-to-date – if you change your business name, move houses, get married, or otherwise make any significant business-oriented changes to your life, ensure you update your W9 form.

Be accurate – The Internal Revenue Service is strict about the accuracy of W9 tax forms. If, for any reason, you submit a W9 with erroneous information, you make yourself prone to penalties and prosecution – or even imprisonment.

Can I refuse to fill out the W9 form?

Yes, you can decline to fill out a w9 tax form, but only if you are unconvinced as to why a company has made the request. Think twice before filling out the W9 form if the business you are dealing with does not have a genuine reason to ask you to fill it out.

But again, as a freelancer, if you decline to fill the W9 form, your client is allowed to withhold taxes from your payment, usually at a rate of 24 percent. Like we mentioned earlier, U.S-based businesses are required by the IRS to request any freelancer earning $600 + during the tax year, to complete a W9. If the contractor or freelancer fails to comply, a fine can be imposed.