It’s my annual “Taxes from A to Z” series! If you’re wondering whether you can claim home office expenses or whether to deduct a capital loss, you won’t want to miss a single letter.
W is for W-9.
A form W-9, Request for Taxpayer Identification Number and Certification, (downloads as a pdf) is used to provide your taxpayer identification number, such as your Social Security Number (SSN), your Individual Taxpayer Number (ITIN), or your Employer Identification Number (EIN), to certain payers. The form is typically completed by a U.S. person. For this purpose, a U.S. person includes an individual (citizen or resident alien), domestic trust or estate, and a partnership, corporation, company, or association created or organized in or under the laws of the United States.
The information on a form W-9 is used to satisfy certain Internal Revenue Service (IRS) reporting requirements and/or to issue a federal form 1099. Forms 1099 may be issued to report payments for income not included on a form W-2 (for wages) or another tax form. That might include earnings from stocks and dividends, distributions from a pension, annuity, profit-sharing or stock bonus plan, canceled debts and certain real estate transactions.
Taxpayers often don’t blink when asked to complete a form W-9 by a bank or a financial institution but may question why other companies might ask. The short answer is that it’s part of doing business under our current tax laws. Companies that may ask you to complete a form W-9 include resale platforms, sites where you sell goods or services (like Etsy), and companies that offer affiliate or ad revenue (like Google or Amazon). You may also be asked to complete a form W-9 if you provide services as an independent contractor or a freelancer, since the person or company who pays you for those services may be required to report the payments to the IRS on a form 1099-MISC (for more on form 1099-MISC, click here).
Filling out the form is fairly simple.
(To view a full-sized version, click here. Note that the numbers in the blue circles referenced below may only be viewed in the full-sized version, depending on your browser.)
- First, you’ll enter your name (as indicated by the 1 in the blue circle), along with any D/B/A or trade name.
- Next, check the box that mirrors your federal tax classification (as indicated by the 2 in the blue circle). For most individual taxpayers, that will be simply an individual, sole proprietor or a single-member limited liability company (SMLLC) disregarded for federal income tax purposes – that’s the first box.
- Third, you’ll enter your address (as indicated by the 3 in the blue circle).
- Fourth, enter your tax identification number, or TIN, (as indicated by the 4 in the blue circle). If you are an individual taxpayer, your TIN is your Social Security Number (SSN) or if you don’t have an SSN, it’s your individual taxpayer identification number (ITIN). If you are a sole proprietor and you have an employer identification number (EIN), you can enter either your SSN or EIN. If you’re organized as an SMLLC that is disregarded for federal income tax purposes, enter your SSN (do not enter the disregarded entity’s EIN).
- Read over the certification (as indicated by the 5 in the blue circle) and make sure that you understand and agree.
- Finally, sign and date (as indicated by the 6 in the blue circle) and return the form to the requestor – you don’t have to do anything else.
While a copy of various forms 1099 may be submitted to the IRS (as with a form W-2), the form W-9 is not typically transmitted to the IRS. The party that requested the form W-9 is required to keep the form on file, in case of a discrepancy or reporting issue, and to confirm or substantiate backup withholding (for more on backup withholding, click here).
You may be subject to a penalty if you refuse to complete a form W-9. It can also complicate business, banking, and other relationships. If you have a question about whether it’s appropriate to fill out a form W-9 or what to include on the form, check with your tax professional.
For your taxes from A to Z, here’s the rest of the series:
- A is for Annual Contribution Limits
- B is for Bonus
- C is for Choate
- D is for Direct Deposit
- E is for Enrolled Agent
- F is for Found Money
- G is for Ghost Preparer
- H is for Hobby Loss Rules
- I is for Installment Agreement
- J is for Joint Accounts
- K is for Kin (Crypto)
- L is for Line of Credit
- M is for Mileage
- N is for NIIT
- O is for Organ Donations
- P is for Private and Parochial Schools
- Q is for Qualifying Relative
- R is for Relief Funds
- S is for Surviving Spouse
- T is for Taxpayer Bill of Rights
- U is for Unused Sick Leave
- V is for Voluntary Bankruptcy