Form W-9 is an Internal Revenue Service (IRS) form that is used to provide a correct Taxpayer Identification Number (TIN) to the individual or entity that has requested it The form is filled out by the taxpayer and allows a business or individual requesting the form to receive the correct TIN associated with the taxpayer to use when reporting income paid to that taxpayer Knowing how to properly fill out Form W-9 is important for anyone who earns income in the United States,
When Is Form W-9 Used?
Form W-9 is used by businesses and individuals any time they need to provide their TIN to the individual or entity that will be reporting payments made to them. Some common situations when a Form W-9 is required include:
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When you begin providing services as an independent contractor to a new client. The client will use the TIN on your W-9 to report income paid to you on a Form 1099-NEC.
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When you open a new bank account or investment account and the bank needs your TIN to properly report interest or dividend payments.
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When you sell real estate, stocks, bonds or other assets which require proper tax reporting by the paying entity.
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When you win prizes or lottery winnings from sponsors who are required to issue a Form 1099 for the winnings.
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When you start a new job and your employer needs your Social Security number for tax reporting purposes.
Basically, anytime income or financial transactions associated with your TIN need to be reported by a paying entity, you will need to provide a Form W-9. It allows the payer to associate payments to you with your correct tax ID.
How to Fill Out Form W-9
Filling out Form W-9 is relatively straightforward as long as you have all required information handy. Here are the steps to complete it properly:
Line 1 – Name
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Enter your legal name as it appears on your tax return and legal documents.
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For individuals, this would be your first and last name.
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For sole proprietor businesses, it would be the owner’s full name (not the business name).
Line 2 – Business Name (if applicable)
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For sole proprietors, enter your doing business as (DBA) name or another trade name for your business if you have one.
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For other business entities like LLCs or corporations, enter the registered legal name of your business.
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If you do not have a business name, you can leave this line blank.
Line 3 – Federal Tax Classification
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Check the box that corresponds to your federal tax classification. For most individuals, this would be “Individual/sole proprietor or single-member LLC.”
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Corporations would check the “C Corporation” box. LLCs with multiple members would check “Partnership” and so forth.
Line 4 – Exemptions
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If you are exempt from backup withholding and/or FATCA reporting, check the appropriate box indicating which exemption applies to you.
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Most individuals would not check either box.
Lines 5 & 6 – Address, City, State, and ZIP Code
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Enter your legal physical address, city, state, and ZIP code. This must match the address tied to your TIN with the IRS.
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You cannot enter a P.O. Box here – it must be a physical street address.
Line 7 – Account Number(s)
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The payer requesting your W-9 may ask you to list any relevant account numbers that they can associate with your TIN.
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Things like invoices, contracts, or specific accounts between you and the payer can be listed here for easier reference.
Part I – Taxpayer Identification Number (TIN)
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Enter your nine-digit Taxpayer Identification Number here. For most individuals, this would be your Social Security Number (SSN).
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Some entities may use an Employer Identification Number (EIN) instead. Make sure to use the correct TIN associated with your business or personal taxes.
Part II – Certification
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Sign and date the certification portion. This certifies under penalty of perjury that the TIN you have provided is your correct number.
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If you are completing W-9 on behalf of a business or another individual, make sure you include your title or relationship that allows you sign on their behalf.
Once the form is fully completed, make a copy for your own records and provide the original signed W-9 to the requester. Double check that all information, especially your TIN, is accurate before submitting. Mistakes could lead to issues with tax reporting and payments down the road. Be sure to update the requester anytime your information changes as well by providing an updated W-9 form.
Specific Entity Type Instructions
There are some additional nuances on Form W-9 depending on your specific federal tax classification. Here are some tips for common entity types:
Sole Proprietorships
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Enter your individual name on Line 1, business name on Line 2 (if applicable), and check the “Individual/sole proprietor or single-member LLC” box for the federal tax classification.
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Enter your SSN or EIN (if you have one) in Part I. An EIN is optional for sole proprietors but can be helpful if you want to keep your SSN private.
Partnerships
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Enter the partnership’s legal name on Line 1 and any DBA on Line 2.
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Check the “Partnership” box for federal tax classification.
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Enter the partnership’s EIN in Part I (SSNs should not be used).
LLCs
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For single-member LLCs, follow the sole proprietor instructions.
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For multi-member LLCs, follow the partnership instructions.
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Note LLCs can also elect to be taxed as corporations, in which case you would check the “C Corporation” box.
Corporations
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Enter the corporation’s legal name on Line 1 and any DBA on Line 2.
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Check the “C Corporation” box for federal tax classification.
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Enter the corporation’s EIN in Part I (never use an SSN).
Common Form W-9 Mistakes
To ensure your W-9 gets processed promptly and accurately, avoid some of these common mistakes:
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Using a nickname instead of legal name or business name.
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Providing a P.O. Box instead of a physical address.
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Missing the business name for sole proprietorships or entering an individual name for corporations.
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Checking the wrong federal tax classification box.
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Including an incorrect TIN – double check that you have the right SSN or EIN before submitting.
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Forgetting to sign and date the certification section.
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Not making corrections or updates when your information changes.
Taking a few extra minutes to review your W-9 and double check all information can help avoid problems. Reach out to the payer requesting the form if you have any questions or need help completing it properly.
Following the steps outlined above provides a helpful guide on how to fill out IRS Form W-9 fully and accurately. Having a properly completed W-9 makes tax reporting seamless for businesses, individuals, and payers by ensuring the correct Taxpayer Identification Numbers are used. Keep this guide handy anytime you need to provide a W-9 to receive timely payments.
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Returning Form W-9
Return your completed Form W-9 to the business that asked you to fill it out. Ideally, youll deliver it in person to limit your exposure to identity theft, but this method often isnt practical. Mail is considered relatively secure.
If you must email the form, you should encrypt both the document and your email message and triple-check that you have the recipient’s correct email address before sending your message. Free services are available online to help you do this, but check their reputations before trusting your documents to them. Typically the business that needs to submit a W-9 to the IRS will give you one to fill out.
Uses of Form W-9
The information obtained on a W-9 form is most often used to create a version of Form 1099. A 1099 form contains information about any income that may have been received by the TIN holder that would not normally be listed on a W-2.
However, a W-2 is only issued to employees of a company, not independent contractors or unrelated vendors. This includes but is not limited to income paid to a person as part of a contract, certain real estate transactions, dividends paid against an investment, and various other financial transactions.
The IRS requires those who are not defined as U.S. citizens or resident aliens to use the appropriate W-8 Form in place of a W-9 form.
Form 1099 is only required to be issued once the minimum income threshold is reached, which for most miscellaneous income is set at $600. Amounts under this threshold must be reported as income by the TIN holder but do not require a 1099 form.
Even though employees are legally required to supply certain personal information to their employers, an employees privacy is protected by law. An employer who discloses an employees personal information in any unauthorized way may be subjected to civil and criminal prosecution.
