Nov 09
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For those who 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 scrap of paper when it comes to government forms. You’ll just 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 so considered a new business entity all of their own).
Besides the above information, an IRS W9 Form will also ask whether or not you are subject to backup withholding. What is “backup withholding,” you may ask. Well, that’s withholding at a flat rate of twenty-eight % on payments made to you or your business under certain circumstances. There are two common reasons for using backup withholding. One reason is if your name and Social Security Number does not match the name and Social Security Number that the IRS has on file for you. A different reason would be if you have outstanding tax debt. In this situation the IRS would have informed you you are subject to compulsory 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 finish. Since in that time of the year, clients are getting ready to send out their 1099 forms. The 1099 Form is used to report self-employment income.
Other places you may be getting a W9 from are brokers and monetary institutions. They might ask for a W9 if you’ll earn interest revenue, dividends, or trading stocks and other securities. As well as the common places a few people may receive requests for the W9 form from more strange places such as owners and people or companies. This is exploited to ask, officially, from someone or business their name, address, and taxpayer identification number for the asking for party to properly issue tax documents to the IRS.
As a rule, any sort of business that requests a W9 Form is one that pays you interest, generally, the types of enterprises 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 unusual source you should ask them why they’re asking for the form and what they are going to be using it for.
What about foreign subcontractors? With foreign subcontractors A W9 isn’t required, it’s just needed to gather info from US people and companies. However if you’ve a foreign contractor that’s working for you, they will most likely be required to fill out one of the varied W8 Forms.
