What is the W-9 Tax form, and how do you fill it out?
Direct deposit papers, benefit registration forms, W-4 forms, and more must be filled out when starting new employment. However, the rules for calculating and paying income taxes change slightly if you’re a freelancer or self-employed. Both you and the businesses that hire you must file tax returns on money made from your services. What you need is a W-9 form.
Instructions for filling the W-9 Tax Form
If you need the guidance on how to fill out a w9, please read the following and follow the steps in filling each box found in the W-9 form:
Box 1
Type in your full, legal name as it appears on your tax return or other financial paperwork.
Box 2
Fill in the Name of Your Company or Disregarded Legal Entity. These are the available options:
- Independent contractor/sole proprietorship
It pertains to you if you are running a business without a partner (i.e., as a sole proprietor) and if you haven’t formed a legal entity to represent your enterprise.
- “C” Corporation
If shareholders and a board of directors run your company, yet you and they file your taxes separately, this is relevant to you.
- “S” Corporation
If your company does not file a separate tax return for itself but instead distributes profits to its shareholders, you will need to follow these rules.
- Partnership
If the business isn’t formally organized but has multiple owners, you should read this.
Trust/estate
- Corporation with limited liability (LLC)
Your business qualifies if it operates as a corporation at the state level but is taxed as a sole proprietorship or partnership (federal level)
- Other
If you submit your W-9 from a country other than the United States, you must check this box. For further information, consult the IRS publication Guide to Foreign Corporations and Other Foreign Entities.
Box 3
By marking the appropriate box, indicate if your company is a sole proprietorship, partnership, company, limited liability partnership, trust/estate, or “other” for federal tax purposes. If you need to be certain, assume it’s a sole proprietorship.
Box 4
Exemptions
As an individual, you can safely ignore this section because it is not relevant to you. Payees who are exempt from standby withhold (corporations, for example) and/or payees who are exempted from reporting under Foreign Account Tax Compliance Act are examples of exemption instances explained in greater detail in the guidelines beginning on page 3. (FATCA). This does not apply to you if you are a self-employed professional.
Tables 5 and 6
Type in your full street address, city, county, & ZIP code.
You must specify which address you will use for your home and business purposes on your tax return. It is appropriate for a sole owner who leases office space to list their home address on their tax return. With this information, the IRS will be able to properly match the tax returns.
The “Requester’s names and addresses” form can be seen on the right. Although it is not required, it is recommended that you keep track of the recipients of your Form W-9.
Part I
A tax identification number is required. Please enter the Social Security Number (SSN) unless you’re a sole owner or independent contractor. The EIN is required only if you are registering as a business other than your own (EIN).
If you’re filing as a sole proprietor and have an EIN, the IRS will need to know either your SSN or EIN to match any Forms 1099 you get with the tax return (these are filled with your SSN).
If your business is relatively young and doesn’t yet have an EIN, you should get one as quickly as possible and write “Applied For” in the appropriate box on your tax return. In the meanwhile, you may be subjected to backup withholding. You can utilize your Individual Tax Id Number (ITIN) from the Internal Revenue Service if you don’t qualify for a Social Security number as a resident alien.
Part 2: Accreditation
Verify the accuracy of the data you just entered. There are significant legal consequences for providing false information. Verify the following before signing and completing the Form W-9:
Conclusion
You can recruit anyone, wherever in the world, in a matter of minutes legally after meeting up with these requirements.
