Request for Taxpayer Identification Number (TIN) and Certification

What Is Form W-9: Request for Taxpayer Identification Number (TIN) and Certification?

Form W-9, Request for Taxpayer Identification Number (TIN) and Certification, is commonly required for freelancers and independent contractors. Clients typically ask for this form to collect essential information needed for filing information returns with the IRS.

Businesses must file information returns using Form 1099-MISC when they pay a freelancer or independent contractor $600 or more during the year. The information on your W-9 will be used to complete your 1099-MISC. They will send one copy of the 1099-MISC to the IRS and another copy to you in late January, following the end of the tax year.

When Is Form W-9 Needed?

You might be asked to fill out a W-9 for several reasons, including:

Form W-9 collects tax information from U.S. persons, including resident aliens. It also collects information from partnerships, corporations, companies, estates, or domestic trusts.

How to Complete Form W-9

Filling out Form W-9 is straightforward. Here’s how to do it:

Step 1: Enter your name as it appears on your tax return.

Step 2: Enter your business name or “disregarded entity” name if it differs from your name in Step 1. For example, you might be a sole proprietor, but for marketing purposes, you don’t use your personal name as your business name; instead, you are “doing business as” another name. You would enter that name here. If you are unsure what a disregarded entity is, you likely are not one; typically, a single-member limited liability company limited liability company falls into this category.

Step 3: Select your federal tax classification: Sole proprietorship, partnership, C corporation, S corporation, trust/estate, limited liability company, or “other.” Check the appropriate box. If you’re unsure, you’re probably a sole proprietorship because you would have had to file paperwork to become one of the other entities.

Step 4: Exemptions. Chances are you’re going to leave these boxes blank. Here are a couple of exceptions: 

1. Payees exempt from backup withholding, such as corporations (in most cases), might need to enter a code in the “Exempt payee code” box. The Form W-9 instructions list the exempt payees and their codes and the types of payments for which these codes should be used. Corporations filling out a W-9 for receipt of interest or dividend payments, for example, would enter code “5.”

2. Payees exempt from reporting under the Foreign Account Tax Compliance Act (FATCA) might need to enter a code in the “Exemption from FATCA reporting code” box. Neither of these boxes will apply to the typical independent contractor or freelancer.

Step 5: Provide your street address, city, state, and zip code. Use the address that you will use on your tax return. For example, if you’re a sole proprietor who rents office space, but you file your tax return using your home address, enter your home address on Form W-9 so the IRS won’t have trouble matching your 1099s with your Form 1040.

Step 6: In this optional step, you can provide the requester’s name and address. You might want to fill out this box to keep a record of to whom you provided your tax identification number.

Step 7: Provide your business’s tax identification number, which will be your Social Security Number (SSN) for sole proprietors or employer identification number (EIN) for other business types. Some sole proprietorships also have EINs, but the IRS prefers that sole proprietors use their SSNs on Form W-9. Again, doing so will make it easier to match any 1099s you receive with your tax return, which you will file under your SSN. If you don’t have an EIN yet, write “applied for” in the TIN space but obtain one promptly to avoid backup withholding. 

Step 8: You must attest to the truthfulness of your information before you can sign form W-9. Intentionally lying on a tax form could mean you’ll have to pay a fine or go to jail. Before signing form W-9, here are the statements you must certify are true, under penalty of perjury:

1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me).

If you were thinking about using a “borrowed,” stolen or made-up tax ID number, think twice before lying under oath.

2. I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.

Most taxpayers are exempt from backup withholding. If you aren’t exempt, the IRS will notify you, and the company paying you needs to know because it is required to withhold income tax from your pay at a flat rate of 24% and send it to the IRS. Incidentally, now you know another good reason not to cheat on your tax return: You might have to tell a future client about it, which might make the company think twice about you. Item (c) says that if you were once subject to backup withholding but aren’t anymore, no one needs to know.

3. I am a U.S. citizen or other U.S. person.

If you’re a resident alien, you’re in the clear. The IRS also considers the following to be a “U.S. person”: a partnership, corporation, company, or association created or organized in the United States or under the laws of the United States; a domestic estate; and a domestic trust. If your business is a partnership that has a foreign partner, special rules apply; read about them in the instructions to form W-9. If you aren’t a U.S. citizen, you may need to fill out form W-8 or form 8233 instead.

4. The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.

You probably won’t need to worry about this one, which concerns the Foreign Account Tax Compliance Act (FATCA).

Special Considerations When Filing Form W-9

If notified by the IRS that you are subject to backup withholding, cross out item 2 on Form W-9. Also, you may cross out item 2 if filling out the form for a real estate transaction.

Most people aren’t required to sign the form unless the IRS has previously notified them of an incorrect TIN. Technicalities aside, however, the person who asked you to fill out Form W-9 will probably consider it incomplete or invalid if you haven’t signed it, so signing is advisable to avoid complications with the requester.

Returning Form W-9

Return your completed Form W-9 to the business that asked you to fill it out. Ideally, you’ll deliver it in person to minimize identity theft, but this method often isn’t practical. Mail is considered relatively secure. If you must email the form, encrypt the document and your email message, and triple-check the recipient’s email address before sending your message. Free services are available online to help you do this, but check their reputations before trusting your documents with them.

Substitute Form W-9

The IRS allows taxpayers to create and use their own Form W-9. This variation is referred to as a substitute Form W-9. The IRS states the form must be substantially similar to the official IRS Form W-9, and satisfy certain certification requirements. The certifications on the substitute Form W-9 must clearly state that under penalties of perjury, all of the criteria are correct:

• The payee’s TIN is correct.
• The payee is not subject to backup withholding due to failure to report interest and dividend income.
• The payee is a U.S. person.
• The FATCA code entered on this form (if any) indicating that the payee is exempt from FATCA reporting is correct.

The substitute form does not allow using a substitute W-9 for matters unrelated to an original W-9 or for imply that a payee is subject to backup withholding unless certain unrelated provisions are met.

The Bottom Line

Accurate information on your Form W-9 ensures that payments you receive – or other transactions that require this form – are properly reported to the IRS. If you’re unsure of some items, such as the proper classification of your business, check with your accountant or another financial advisor.