Taxpayer asks:
I’m a contractor who signed a w-9 form but am no longer gonna do the work, am I okay or how do I cancel the w-9 form????
Taxgirl says:
You should be fine. Here’s why.
A form W-9 is used to provide your taxpayer identification number (such as your Social Security Number (SSN) or your Employer Identification Number (EIN)) to certain payers. The form is typically completed by U.S. persons (citizens or resident aliens), domestics trusts and estates, and a partnership, corporation, company, or association created or organized in or under the laws of the United States.
There are a few reasons why a company might ask you to complete a form W-9. In your case, you were asked to complete a form W-9 because you were planning on providing services as an independent contractor or a freelancer. The person who was paying you for those services might have been required to report the payments to the Internal Revenue Service (IRS), typically using a form 1099, if those payments met certain criteria. One of the most common reasons for issuing a form 1099 is when total payments exceed $600 in one tax year.
But if you didn’t perform the services and didn’t get paid, there’s no need for the payer to issue the form 1099. And while a copy of the form 1099 reporting those payments would have been submitted to the IRS (just like a form W-2), the form W-9 is not typically transmitted to the IRS. The only party that should have that form W-9 would be the company (or the company’s tax professional). So if you’re worried that the IRS might have a record that you were intending to do some work for this company which might trigger a tax consequence, that’s not the case. You can sleep at night.
So why does the company have the form in the first place if you never did the work? In many cases, companies ask for a form W-9 to be completed at the beginning of a business or employment relationship even if it’s not clear that you’ll meet the 1099 filing threshold. They ask early in the game to avoid the hassle of asking at the end: It’s nearly impossible to get taxpayers to fill out the forms after the fact – trust me.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
