Skip to main content

Form W-9: Request for Taxpayer Identification Number and Certification

Form W-9, officially known as the "Request for Taxpayer Identification Number and Certification," is an IRS document used primarily to collect a person's Taxpayer Identification Number (TIN) and other pertinent information. This form is essential for various financial and tax-related transactions. Here is a detailed and comprehensive explanation of its purpose and usage:

Purpose of Form W-9​

1. Collection of Taxpayer Identification Number (TIN)​

The primary purpose of Form W-9 is to collect the correct TIN from U.S. persons, including resident aliens. The TIN can be a Social Security Number (SSN), Employer Identification Number (EIN), or Individual Taxpayer Identification Number (ITIN). This information is crucial for the requester, typically a business or financial institution, to report income paid to the individual or entity.

2. Verification of Identity​

Form W-9 helps verify the identity of the individual or entity receiving income. It ensures that the name and TIN provided match the IRS records, which helps prevent errors in tax reporting and potential issues with the IRS.

3. Preparation of Information Returns​

The information collected on Form W-9 is used to prepare various information returns, such as Form 1099. These forms report different types of income to the IRS, including but not limited to:

  • Independent contractor income
  • Interest and dividend payments
  • Real estate transactions
  • Debt cancellations
  • Mortgage interest paid
  • IRA contributions

4. Backup Withholding​

Form W-9 includes a certification that the TIN provided is correct and that the individual is not subject to backup withholding. Backup withholding is a tax withholding requirement on certain payments if the payee has not provided a correct TIN or has failed to report interest or dividend income correctly in the past. The backup withholding rate is 24%.

5. Compliance with FATCA​

For certain entities, Form W-9 includes a section for exemptions from the Foreign Account Tax Compliance Act (FATCA) reporting. This is relevant for financial institutions that need to report information about U.S. account holders to the IRS.

Who Needs to Fill Out Form W-9?​

1. Independent Contractors and Freelancers​

Individuals who work as independent contractors, freelancers, or gig workers and are paid $600 or more by a business in a tax year need to fill out Form W-9. This form is used by the business to report the payments made to the contractor on Form 1099-MISC.

2. Businesses and Financial Institutions​

Businesses and financial institutions request Form W-9 from individuals or entities to collect the necessary information for reporting various types of income to the IRS. This includes banks, brokerage firms, and other financial entities that need to report interest, dividends, and other financial transactions.

3. Other Situations​

Form W-9 may also be required in other situations, such as:

  • When opening a new bank account
  • When a debt is forgiven or canceled
  • When making contributions to an IRA
  • For real estate transactions

How to Fill Out Form W-9​

Filling out Form W-9 is relatively straightforward. Here are the key sections:

1. Personal Information​

  • Line 1: Full legal name as shown on the tax return.
  • Line 2: Business name, trade name, or disregarded entity name, if applicable.
  • Line 3: Federal tax classification (e.g., individual/sole proprietor, C corporation, S corporation, partnership, trust/estate).
  • Line 4: Exemptions, if applicable (e.g., exempt payee code, FATCA exemption code).

2. Address​

  • Lines 5 and 6: Address, city, state, and ZIP code where the requester should send the information return.

3. Taxpayer Identification Number (TIN)​

  • Part I: Enter the SSN or EIN, depending on the entity type.

4. Certification​

  • Part II: Sign and date the form to certify that the information provided is correct and that the individual is not subject to backup withholding.

Conclusion​

Form W-9 is a critical document for tax reporting and compliance. It ensures that businesses and financial institutions have the correct information to report various types of income to the IRS. By collecting the TIN and other necessary details, Form W-9 helps maintain accurate tax records and prevents issues related to incorrect or missing information. Independent contractors, freelancers, and other non-employee workers must be diligent in providing this form to their clients to ensure proper tax reporting and compliance.

Provide Your Legal Name Accurately

For individuals, enter your full legal name as it appears on your tax return. This should match your Social Security card. For businesses, enter the legal business name as registered with the IRS, not a trade name or DBA. Ensure your name is spelled correctly and matches IRS records to avoid potential issues with information reporting.

Enter the Correct Taxpayer Identification Number (TIN)

For individuals, this is usually your Social Security Number (SSN). For businesses, use the Employer Identification Number (EIN) issued by the IRS. Double-check that you have entered the TIN accurately, as an incorrect TIN can lead to issues like backup withholding or IRS notices.

Following these tips will help ensure that the information you provide on Form W-9 matches IRS records, preventing potential complications with tax reporting and compliance.

References​