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The IRS W9 Form Made Simple
For those that are independent contractors, as well as for those who work for themselves, a W9 Form is needed to report their Social Security Number or Business Tax Identification Number to their clientele. This is a pretty cut and dry scrap of paper when it comes to government forms. You may 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 therefore considered a new business entity all of their own).
Besides the above info, an IRS W9 Form will also ask whether or not you are subject to backup withholding. What's "backup withholding," you could 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 standard reasons for using backup withholding. 1 explanation is if your name and Social Security Number does not match the name and Social Security Number the IRS has on file for you. A different reason would be if you have outstanding tax debt. In this case the IRS would have notified you you are subject to imperative backup withholding till the outstanding tax debt is totally paid for.
During the tax season of the year, contractors will be getting W9 forms to finish. Since during that time of the year, clients are making preparations to send out their 1099 forms. The 1099 Form is used to report self-employment income.
Other places you could be getting a W9 from are brokers and monetary establishments. They would ask for a W9 if you may earn interest income, dividends, or trading stocks and other securities. As well as the usual places a few of the people may receive requests for the W9 form from more unusual places like owners and other people or firms. This is exploited to ask, officially, from an individual or business their name, address, and taxpayer identification number in order for the asking for party to properly issue tax documents to the IRS.
As a rule, any type of business that requests a W9 Form is one that pays you interest, in general, the kinds of businesses that request Form W-9 is any business that pays you reportable revenue. However if you feel that you have received this form from a weird source you need to ask them why they're requesting the form and what they will be using it for.
What about foreign subcontractors? With foreign contractors A W9 isn't needed, it is just wanted to gather info from US people and companies. However if you've got a foreign contractor that is working for you, they will very probably be needed to fill out one of the assorted W8 Forms.