Taxpayer asks: In doing some side work, a client sent me a W-9 to fill out and return. Why would they do that, and why is this the first time I’ve received one from a client? Is my new client somehow reporting this income or putting it down as an expense, maybe?
Taxgirl says: Independent contractors don’t usually have anything withheld on their checks, like employees do. However, if you refuse to give your tax ID or if you are a foreign taxpayer (and certain other taxpayers), the person paying you is required to withhold taxes. So, basically the payer ask you to swear that you’re not one of those people by completing the form W-9 (or form W-8 for foreign taxpayers and other special circumstances). You’d know if you were subject to back-up withholding.
Think of it as a CYA thing for the companies. Companies who expect to pay out over $600 (and thus issue a form 1099) or big companies who have lots of payees find it easier for record keeping purposes to make everyone fill one out do it. It’s just for record keeping and to help them with reporting later in the year.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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{ 4 comments… read them below or add one }
I was wondering if I never filled out an w-9 when I did construction work for a year and got sent a 1099 can I get around paying taxes for that doesn’t the company have to have a w-9 on file to prove I worked for them?
The W-9 isn’t “proof” that you worked there – it’s simply a record that the company has of your Social Security number and your tax withholding status. The fact that you got a form 1099 means that the company properly submitted your pay information to the IRS. You can’t dispute a form 1099 on the basis of no form W-9.
Hello, my employer hired me for 3 months in 2008 and paid me in check form. I asked her for a 1099 over and over again but she never sent it. I added in her payments as part of my pay even though I didn’t attach the paperwork for my taxes. I hope this doesn’t cause a red flag for me to get audited. What do you think?
I think you’re fine. The IRS is glad that you’re reporting! If it was over $600, the payor had an obligation to file a 1099, but you did the right thing.