IRS Form W-9

Form W-9 is an Internal Revenue Service (IRS) tax form that self-employed individuals fill out with their identifying information. Businesses issue this form and collect it once the self-employed individuals have completed it. Then, they use the details the self-employed individuals provided to report nonemployee compensation to the IRS properly.

Table of Contents

• What Is Form W-9?
• When Is Form W-9 Needed?
• What Happens If a W-9 Is Not Collected?
• IRS W-9 Form Terms
• How to Fill out Form W-9
• Special Considerations for Form W-9
• W-9 Form Sample
• Frequently Asked Questions

What Is Form W-9?

Form W-9 is an IRS tax form that lets businesses collect identifying information from nonemployees, including independent contractors, gig workers, freelance workers, vendors, and consultants. Nonemployees complete this form by providing their taxpayer identification numbers (TINs), names, addresses, and other information.

Then, the taxpayers send their forms back to the entities that supplied them. Companies use the information on these forms to fill out 1099-NECs or 1099-MISCs, which report nonemployee compensation and miscellaneous income, respectively.

Form W-9 vs. Form W-4: What’s the Difference?

W-9 and W-4 are important tax documents, but they have key differences. W-9s are for collecting identifying information from self-employed individuals, while W-4s are for gathering tax withholding preferences from traditional employees.

Traditional employees don’t have to worry about filling out W-9s, and self-employed individuals don’t have to complete W-4s.

Here’s a brief overview of their differences:

When Is Form W-9 Needed?

According to federal law, employers must collect withholdings from employees they pay [1] . A business must collect a W-9 from a nonemployee if they’re submitting payments but not withholding taxes.

Once a nonemployee completes and signs a W-9, they must handle the tax liability they incur with all future payments.

Here are some common use cases for W-9s:

• Independent Contractors: Companies hiring vendors or freelancers to perform services may have them fill out W-9s. This way, the businesses can furnish the proper 1099-NEC forms.
• Legal Settlements: If you receive compensation from a settlement, the settling party (the paying party) will have you complete a W-9 so they can furnish the proper tax forms, like 1099-MISCs.
• Real Estate Transactions: If a property sale occurs, the seller or buyer may complete a W-9 so the other party can disclose sales proceeds on a 1099-S.
• Rental Income: If you receive paid income for a rental property, you may have to fill out a W-9 to report the income on a 1099-MISC later.
• Banking: Banks may need customers to fill out a W-9 so they can report income paid via interest, dividends, or capital gains on a 1099-DIV.

When Is a W-9 Not Needed?

Here are some instances in which a W-9 isn’t necessary:

• Employee Wages: Employees fill out a W-4 instead of a W-9.
• Exempt Wages: Payments for goods instead of services or payments to a tax-exempt organization don’t require a W-9 [2] .
• Less than $600 payments: Payments under $600 to a single person in a year don’t require reporting to the IRS, so the recipient won’t need to fill out a W-9 [3] .
• Personal Transactions: You don’t have to report personal payments from friends and family members [4] .

What Happens If a W-9 Is Not Collected?

The payer is responsible for distributing and collecting the W-9 from the payee, and the payee must fill it out and return it timely. Both parties can face consequences for noncompliance:

Payer

The payer must submit a 1099 form for a nonemployee even if the nonemployee doesn’t return their W-9. If the payer doesn’t have the payee’s TIN, the payer must write “Refused to Provide” on the 1099 form they send to the IRS. The IRS can then notify the payee that they’ll be subject to backup withholding.

Here are the two main offenses they can commit and the resulting penalties they may face:

• Not filing 1099s on time: Failing to file 1099s on time or providing incorrect information can result in fines ranging from $60 to $630 [5] . The fine amount will depend on the time it takes to file the proper returns and the payer’s intent.
• Misusing TINs: Payers who misuse TINs that payees submit can face criminal or civil penalties, depending on the severity of the offense.

Payee

The payee must provide an accurate W-9 form when a payer requests it. Here are some common payee offenses and the resulting penalties:

• Failing to provide a W-9: Failing to provide a W-9 when a payer requests it violates 26 U.S. Code § 6723, so the payee may have to pay a $50 fine.
• Submitting false information: Submitting false information might be an attempt at tax fraud or evasion, so the payee may face criminal penalties, including monetary fines or jail time.

If a payee doesn’t fill out a W-9 or provides an incorrect TIN, the payer will have to subject them to backup withholding until they receive the correct TIN. In the meantime, the payee will be subject to backup withholding.

IRS W-9 Form Terms

As you fill out a W-9, you may encounter some confusing terminology. Review definitions of some common terms so you can fill out this form with ease:

• Taxpayer Identification Number (TIN): Individuals use either their Social Security number (SSN) or their Individual Taxpayer Identification Number (ITIN) to identify themselves when conducting business. Companies use their Employer Identification Numbers (EINs) to similarly identify themselves.
• Backup Withholding: Backup withholding occurs when a payer has to withhold a certain percentage of a payee’s income because the payee failed to report income properly or didn’t meet TIN certification requirements. The current backup withholding rate is 24% of the payee’s future payments [6] .
• FATCA Compliance: The Foreign Account Tax Compliance Act (FATCA) demands foreign financial institutions disclose information about financial accounts that U.S. taxpayers hold to the IRS or face backup withholding. Some entities may be exempt from or subject to it, depending on factors like their size or their location in a participating jurisdiction.
• Exemptions: Exemptions only apply to specific entities, so individual taxpayers don’t have to worry about them. For example, some entities may be exempt from backup withholding.

How to Fill out Form W-9

Feel more confident filling out your W-9 by following these steps:

Step 1 – Write Your Name

Input your name as it appears on your tax return. Don’t leave Line 1 (Name) blank, as it’s essential for recognizing this IRS form as complete.

Step 2 – Enter Your Business Name

Provide your business name or your “disregarded entity” name in Line 2. For example, suppose you have a sole proprietorship. If you spread the word about your business under a different name than your personal name, you have a disregarded entity name.

Only complete this section if your business name or disregarded entity name differs from the input in Line 1.

Step 3 – Indicate Your Business Type

Select your business type in Line 3. The W-9 form lists seven options for naming your business type:

• Individual/sole proprietor or single-member LLC
• C Corporation
• S Corporation
• Partnership
• Trust/estate
• Limited liability company (ensure to also provide the tax classification)
• Other

Only select one classification. If you don’t know which type to put, refer to the table on page three of your W-9 for guidance.

Step 4 – Specify Exemptions

Specific exemptions may apply to certain entities but often won’t apply to individual freelancers or contractors. Review the instructions on page three of your W-9 to see if exemptions apply to you. If they don’t apply to you, leave the exemptions section (Line 4) blank.

If they are relevant, here are a couple of scenarios that may apply to you:

• Exemption from backup withholding: Some corporations and other entities are often exempt from backup withholding. Input the proper code into the “Exempt payee code” if this categorization applies to you. For example, a corporation completing a W-9 to eventually receive dividend payments would input code “5.”
• Exemption under the FATCA: If you’re exempt from reporting under the FATCA, you can enter a code, A through M, depending on what account type you have.

Please consult with the financial institution requesting this form to determine if any exemptions pertain to you.

Step 5 – Write Your Address

Provide your physical address on lines 5-6. Line 5 will contain the first part of your address, including your number, street, and apartment/suite number. Line 6 will contain the second part of your address, including your city, state, and ZIP code.

Step 6 – Input an Account Number

While Line 7 (Account Number) is optional, you can include an account number to identify yourself within a client’s system of contractors. The payer will supply this number to the payee if they want them to write it.

Step 7 – Provide the Requester’s Information

The requestor information is another optional section, but it can increase the authenticity of the form. The payee can fill it out more confidently, knowing where the information will go.

Step 8 – Fill Out Part I (Taxpayer Identification Number)

Input the correct taxpayer identification number (TIN) for your business. If you’re a sole proprietor, this number will be your Social Security number (SSN). If you’re a corporation or another type of business, the number will be your employer identification number (EIN).

If you’re a new business trying to file your federal tax return and don’t yet have an EIN, you can visit the IRS website and apply for one there. Once you apply for one, you can indicate you’ve applied for it on your W-9.

Step 9 – Complete Part II (Certification)

In Part II of your form, you can verify that all the information you’ve provided is true. Read through the four statements you attest to be accurate, which are:

1. Your TIN is correct, or you’re waiting for the IRS to issue one.
2. You’re not subject to backup withholding because one of the three scenarios applies:
   • You’re exempt from backup withholding.
   • The IRS hasn’t informed you that you’re subject to backup withholding because of a failure to report dividends and interest.
   • The IRS has informed you that you no longer have to participate in backup withholding.
3. You’re a U.S. citizen or another U.S. person, including a resident alien. The IRS defines a U.S. person in its instructions.
4. The FATCA code you entered is correct (if applicable).

When you’re reviewing this section, it’s essential to double-check the accuracy of the information you provided. Incorrect information can result in severe consequences, including fines and jail time, depending on the intent behind your actions.

Step 10 – Sign and Date

Sign your name and date the form to complete the certification process.

Special Considerations for Form W-9

Here are some special considerations when filling out a Form W-9:

Signing Requirements

In most cases, signing a W-9 is optional. It will only be necessary in instances when the IRS has notified you that you previously entered an incorrect TIN.

However, consider signing your name, especially if the payer has requested you to do so.

Certification Exceptions

Remember that you’re certifying four statements to be true in the certification section. You must cross out the statement about not being subject to backup withholding if either of the following scenarios applies to you:

• You’re filling out the W-9 concerning a real estate transaction (backup withholding doesn’t apply for real estate transactions).
• The IRS has notified you that you’re currently subject to backup withholding because you didn’t report all dividends and interest on your federal tax return.

The Return Process

Once you complete your W-9, you must return it to the business that requested it. In-person delivery can minimize the risk of identity theft or fraud, but it might not always be possible. Consider using certified mail to guarantee the recipient receives your document.

If you must use email, ensure the recipient’s address is accurate. You should also encrypt your message and the document to protect your information from cyber threats.

W-9 Form Sample

Download a W-9 form in PDF format so you can request a nonemployee to provide identifying information:

DOWNLOAD PDF

Frequently Asked Questions