Employers, employees, contractors, and freelancers—just some of the people who might be wondering what to do with Form W-9. As a contractor, are you the one filling it out from your client? Or, as a business owner, you might be wondering who does the requesting and submitting. And once you have the forms filled out, what do you do with them?
All good questions that all need answers. Luckily for you, we’ve got them.
We’ll answer the big question of what Form W-9 is, plus we’ll tell you how to request, submit, and read and understand Form W-9.
But before we begin our wonderful W-9 journey, here’s a little TLDR. Because, hey, we know you’re busy running your business.
What is Form W-9? Form W-9 is a document that a business collects from each independent contractor that they hire.
What do you do with it? Form W-9 is not submitted to the IRS—instead, businesses keep it and use the information provided to compile annual Form 1099-NEC.
Who needs to fill them out? Most independent contractors in the US need to fill out Form W-9.
When do you request Form W-9? This form should be completed by the contractor before any work begins.
What does it have on it? Form W-9 shares key information about the independent contractor that’s being hired. This includes their business name and address, federal tax classification (i.e. sole proprietor, limited liability company, S corporation, etc.), and Taxpayer Identification Number (TIN) or social security number (SSN).
What is Form W-9?
Form W-9 is a document that businesses collect from each independent contractor that they hire.
It provides the business owner with key information about who they’ll be working with. This includes contractor business details, like their business name (if it’s different from their actual name), their business address, and their Taxpayer Identification Number (TIN). It gets filled out by the contractor when a business begins working with them.
Unlike many other tax and payroll forms, Form W-9 doesn’t go to the Internal Revenue Service (IRS) or any other tax authority. Instead, businesses hold onto their contractors’ completed W-9 forms, then use the information provided to compile annual Form 1099-NEC.
Who requests Form W-9?
Now that we know who’s responsible for filling out Form W-9, you might be wondering who actually requests it. That would be whoever is doing the paying.
Business owners (or whoever is paying a contractor) are the ones who are responsible for requesting Form W-9 from their freelancers. But remember: once the requester gets the form, there’s no obligation to file the W-9 with the IRS.
That person keeps the form on file and uses this information to prepare other returns, such as 1099 forms and 1098 forms. It’s also used to determine whether federal tax withholding is necessary on the payments you receive.
Who is required to submit Form W-9?
Generally speaking, freelancers, contractors, or anyone who’s been hired for a job or service has to submit Form W-9 when they engage with a company. This is to report any relevant information to the IRS, including how much said contractor is getting paid.
For example, you hire a freelance website developer to build you a mobile-friendly and beautifully-branded website. You’re hiring them on an hourly basis for about two weeks and a total of 75 hours. Because you’ll be paying the developer for their work, they’ll first need to fill out Form W-9 so their payments can be tracked—especially if they’re being paid $600 or more in the tax year. At that point, the W-9 is mandatory. (But more on that later 👇).
There’s also a few other scenarios where a contractor might be required to submit Form W-9. For instance, a bank or mortgage company might request one so they can properly report other forms for the IRS. Taxpaying contractors might also have to ask to submit a W-9 to do things to cancel student loans or complete real estate transactions.
When are W-9 forms received?
W-9 forms should be received before the work begins. If this doesn't happen, the business paying them might run into some trouble, like being required to pay any withholding taxes on the funds that the contractor is owed.
This is called backup withholding. It’s money that’s sent to the IRS from income payments that wouldn’t have been subject to withholding if forms and the applicable information were provided on time.
Let’s simplify this with an example. You hire a photographer to take pictures of a week-long arts festival you’re planning. In this scenario, your photographer is the tax-paying contractor, and unfortunately, they provided the wrong information on their W-9. In this scenario, they wrote the wrong taxpayer identification number (TIN), which means their income can’t be tracked properly. When this happens, they might have to pay backup withholding. If you do not collect backup withholding from affected payees as required, you may become liable for any uncollected amount.
Another scenario? The IRS thinks the contractor owes them money and they haven’t been able to collect it any other way, so backup withholding occurs.
The good news? In most cases, this can easily be prevented. If you’re a contractor, make sure you supply the right information, do so on time, and pay the appropriate amount of taxes each year.
How to read and fill out Form W-9
Form W-9 is broken down into a few different line items. Here’s more detail for each section.
Line 1 - Name
If you’re submitting the W-9 as an individual, enter the name that’s shown on your tax return.
Had a big life event (💍) and changed your last name, but were too busy honeymooning to tell the Social Security Administration (SSA)? Just enter your first name and whatever last name is on your Social Security Card, then your new last name.
Have you applied for an individual taxpayer identification number (ITIN)? Then enter your name like you’ve done on your Form W-7 application on Line 1a. Make sure it matches with what’s on your Form 1040.
If you’re a sole proprietor or single-member LLC, you’ll want to provide your individual name like it’s shown on your 1040/1040A/1040EZ. You’ll enter your business, trade or “doing business as” (DBA) name on Line 2.
Last but not least, partnerships. If you’re submitting the as a partnership, multiple-member LLC, C corporation or S corporation, you’ll fill out the name on Line 1 to match the corresponding tax return, as well as the business, trade or DBA name on Line 2.
Line 2 - Business name
If you’re filling out Form W-9 as a business, you’ll use Line 2 to provide the required information.
Line 3 - Federal tax classification
This section will depend on your individual or business type. First, choose the most appropriate federal tax classification on Line 3 for the name you’ve filled in on Line 1. Make sure you check only one box on Line 3.
Here are the options for each box to check on Line 3:
If you or your business that are listed on Line 1 as a corporation, choose Corporation.
If you’re an individual, sole proprietorship, or single-member LLC owned by an individual and disregarded for federal tax purposes, choose “individual/sole proprietor” or “single-member LLC.”
If you’re a partnership, choose “partnership.”
If trust/estate, choose “trust/estate.”
Lastly—and in more complex scenarios–if your business is considered to be an LLC that’s treated as a partnership, or a disregarded entity that’s separate from its owner but is owned by another LLC that’s not disregarded for federal tax purposes, choose “limited liability company” and enter the appropriate tax classification (P = Partnership; C = C corporation; or S = S corporation).
P.S. Did the last one throw you for a loop? Here’s a bit more context to get you sorted.
In tax language, a “disregarded entity” is defined as a single-owner business entity that’s disregarded by the IRS for federal income tax purposes. In this scenario, the business owner simply pays the business’s taxes on their own personal tax return. Single-member limited liability companies (LLCs) are the most common type of disregarded entity.
Line 4 - Exemptions
Have you filled out Form W-9 as an individual? Then this section isn’t needed.
However, if you’re a business or organization that gets a pass on backup withholding (example: a big corporation), you’ll fill out this section. In this case, you’ll be required to provide a number or letter code from the instructions that explain the reasoning behind your declaration.
Lines 5 and 6 - Address, City, State and ZIP Code
This section is for the address that your 1099 gets mailed to. It should be your home or business address. Full mailing address, including city, state, and ZIP code be placed here.
Line 7 - Account number(s)
This line is needed if you have to give the person or business who’s paying you account info, like bank or brokerage accounts. Essentially, whatever is applicable to the W-9 form you’re filling out.
Part I - TIN
This is where your taxpayer identification number (TIN) is filled in. If you’re filing as an individual or single-member LLC, you’ll likely use your Social Security Number. This section might also have you fill in your Employer Identification Number (EIN), but that’s only if you’re a multi-member LLC that’s classified as a partnership, C corporation, or S corporation.
Sole proprietor? You’ve got options, and can include either of the above options.
For those living and working in the U.S. as a “resident alien,” you’re ineligible for a Social Security Number, so you’ll use your IRS ITIN in this section.
Part II - Certification
Ready to declare that everything you’ve provided in this form is accurate to the best of your knowledge? Then it’s time to sign and date your W-9 form in the Certification section. But there’s a few rules to follow before you do just that.
For example: if you’re subject to backup withholding, you’ll need to cross out Item 2 of the certification.
Also, if you’re completing Form W-9 as a joint account, make sure that only the person whose TIN is recorded in Part I signs the certification.
Form W-9 FAQs
Although we’ve covered the “what you need to know” part of W-9 forms, you might still have a few questions on these forms and the information needed to fill them out.
To get you the info you need, here are a few frequently asked questions—and their answers, of course.
Do businesses really need to have contractors fill out form W-9?
Short answer? Yes!
One of the key differences between working with independent contractors versus employees is that contractors are responsible for paying their self-employment taxes themselves. This means that the IRS needs a way to keep track of the money paid to contractors, and ensure they’re reporting all of the income they earn.
What’s the $600 rule?
Your business isn’t required to file Form 1099-NEC with the IRS for any contractor that’s been paid less than $600 in the tax year (state rules vary). That said, regardless of the amount you expect to pay out during the year, it’s still best practice to have each contractor complete Form W-9—just in case.
What is backup withholding?
Backup withholding is a situation where a payer (like a business or client) is required by the IRS to hold a certain percentage of funds back from the person or contractor they’re paying.
Currently in the US, this is a 24% tax, and it’s taken from payments to make sure that the IRS receives the tax due on this income.
This can happen if you’ve filed the wrong TIN or because you didn’t report or underreported interest and dividend income that you’ve received on your federal income tax return.
What is the difference between Form W-9 and Form W-4?
Forms W-9 and W-4 are similar in that they’re both a key part of entering into a new working relationship with someone. That said, there is a difference between the two and that comes down to the type of working relationship in question.
Form W-9 is strictly used to get information from independent contractors, whereas Form W-4 is filled out by employees. W-4 forms include more information than a W-9, including the employee’s marital status and additional deduction amounts. For more details on IRS Form W-4, you can check out our guide here.
What if I don't obtain a W-9 from a payee?
As a business owner or someone paying a contractor, you have to make sure that you’ve obtained a W-9 and the required information before work begins. If the contractor hasn’t provided their TIN, the IRS will need you to start withholding tax money until all of the required forms are received.
If you decide to put your contractor to work without the forms or withholding taxes, you might face some penalties from the IRS.
Bottom line: get that W-9 before work begins.
What if I don't submit Form W-9 for a payee?
If you have a contractor or a freelancer who doesn’t submit their W-9 or does so incorrectly (example: using the wrong TIN), if you’re paying them, you might face some fines. You might also face penalties of perjury, so make sure everything is in the right order, especially that TIN.
If I’m the contractor, do I need to send in a W-9?
While W-9 forms are for self-employed workers like freelancers and contractors, which means you’re likely to have to fill one out if the business you work for requests you to. This might be because you’ve earned $600 or more in a calendar year without being working as their employee, or because they’re covering their bases just in case you work more than that $600 minimum.
Moving forward with Form W-9
From both the perspective of the business owner and the contractor filling them out, W-9 forms are actually super simple to complete. Not only that, but for the businesses who are paying contractors, W-9 forms provide a lot of relevant information about the contractor they're paying—the kind of information that the IRS wants you to track.
So, if you’re a business owner who’s paying a contractor or you’re the contractor who’s getting paid, make sure a W-9 is being requested and submitted. Especially if the amount that’s being paid is $600 or more.
Need help with tracking payments? Well, here at Wave, that’s kind of our speciality. We’ve also got in-house advisors who are here to help you with your questions about W-9s and US taxes.