Form W9: A Brief Intro
Are you an independent contractor working in the US, wondering why you have received a Form W9?
Before reaching out to the entity who has requested it, go through this article, and we are sure it will answer, if not 100%, then at least 99% of your queries.
First of all, Form W9 is a form requested to be filled by independent contractors from the entities or individuals who have rendered their services. It is a must as per the US Tax regulations set by the IRS. It requires name, company name (wherever applicable), tax identification number, and individual address.
Hoping that you have understood the meaning, let’s move to the more important part.
Common Questions related to Form W9
Form W 9 is considered one of the simplest forms to fill related to the tax compliances in the US. However, there can still be a few questions that need to be answered in order to understand its significance and use. Below are some of the most commonly asked questions about Form W9.
Do employees also need to fill W9?
Well, it’ is true that the employees need to provide information to their employers as per the US Tax Compliance. However, they are required to fill Form W 4. An employer issues this form in order to ask the amount of payroll taxes that can be withheld.
Form W-9 is particularly useful for non-employees such as consultants, freelancers, professional experts, and so on who render their services. They are also requested to fill the form. So, one must be aware of the form they are filling in order to make the distinction clear.
Is it required to send a W9 every year?
Form W 9 includes specific information about the independent contractor who renders services to an entity. One must fill a new W9 form or update it only if there are any changes in the given information. If the information and the entity requesting the form are the same, then it’s not required to fill Form W9 every year.
What is backup withholding?
Backup withholding is a portion of payment made to an individual that an entity can withhold in case they refuse to fill the form W9. As per the tax regulations in the US, the payer can withhold 24% of the pay made to the independent contractors and is sent to the IRS.
It is considered as the tax on the income which otherwise would not be withheld as the independent contractor will have to pay the taxes on their own. So, the backup withholding can be seen as a backup option of getting taxes paid by the individuals in the US.
What to do in case an unknown entity requests me to fill Form W9?
If you received the form from an unknown entity/someone who should not have sent you Form W9, you can ask them the reason behind it. Remember that you should not receive a Form W 9 in case you are an employee. Also, if your income from that source is less than the minimum threshold amount mentioned for Form 1099-NEC or 1099-MISC, you are not liable to fill in the details in Form W9. Consult from a tax expert to guide you through in such a situation.
Is it possible to refuse filling the Form W9?
If you’ve received wrong/incorrect request for Form W9, then yes, you can refuse to fill the Form W 9. But ensure that the reason is genuine.
If per the law, you must fill a Form W9, refusing to do so can lead the entity who rendered your services to withhold 24% of your pay as backup withholding.
In which case do I need to mention the EIN?
In some cases, LLCs can also operate as independent contractors. If the LLCs are single member LLCs, then they are required to mention the name of the company. Along with that you must fill the business type and the individual taxpayer identification number.
However, if it’s a multi member LLC, then you must mention the FEIN in the form instead of the ITIN.
W-9 is a commonly and widely used tax form across the US. However, there could be many frauds that can happen around it. Therefore, to make sure that you are not getting into a scam, keep the following things in mind:
- Be careful about the individual/entity requesting the Form W 9: In case you don’t know the entity or doubt it by sharing your crucial information, get it checked and confirmed first. It is better to be smart than sorry.
- Beware of the channels: Make sure that the channel you are using to share the form or information is secured. In case you are using online mode, keep it encrypted so that it doesn’t fall in the wrong hands.
- Be sure of the Form request: In case you are an employee, then remember that you must receive a Form W4. Make sure your employer is not scamming you by keeping you as a freelancer as it reduces many benefits.
- Be sure of the purpose: In case you have requested an unexpected request of Form W9, then ask the requesting entity for the purpose. Only after confirming the need of W9, fill the form.
So, are you an independent contractor who must fill this form and are unaware of it, we have got you. Go through our write-up on How and When to fill Form W-9 to keep up with the US Tax Compliances.
Written by – Priyanka Rampal
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