What Is a W-9? Definition and Who Fills It Out
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A W-9 is an IRS tax form most commonly used by businesses to collect information from nonemployees, such as freelancers or contractors, who earn $600 or more from the company.
Taxpayers with dividend, interest and other types of investment income may also be asked to fill out a W-9 form by a financial institution.
W-9s are used by businesses to generate 1099s, which are then sent to the taxpayer and the IRS.
What is a W-9 tax form?
Form W-9, formally called "Request for Taxpayer Identification Number and Certification," is an IRS document that businesses use to collect income tax identification information from independent contractors who are being paid $600 or more during a year.
Unlike employees, workers with W-9 status don’t usually have income taxes withheld from their payments. Instead, an independent contractor’s clients report payments to the IRS, and it’s up to the worker to settle up, usually through quarterly estimated tax payments. (A notable exception: Some independent contractors’ payments may be subject to backup withholding if they’ve had tax issues.)
Who has to fill out a W-9 form?
Among the people who might have to fill out W-9 forms are independent contractors, gig workers, freelancers and anyone else who is paid outside an employer/employee relationship.
In most cases, the IRS says a business should ask for a W-9 form if it is paying an independent contractor who meets the following criteria:
The worker is not an employee.
The payment is part of your business.
The annual value of the payments is at least $600.
At the end of the year, businesses are expected to tally up their payments to W-9 workers and report them to the IRS and the contractors, usually on Form 1099-NEC.
Other uses of Form W-9
While Form W-9 is frequently used for independent contractors, there are a few other situations in which a business may request a completed Form W-9. Examples include interest income, dividend income and proceeds from investment sales.
How to fill out a Form W-9
The principal piece of information that businesses collect on a Form W-9 is the tax identification of whomever they’re paying. This can be a Social Security number or taxpayer identification number (in some cases, it can also be an employer identification number).
Here is some other information a taxpayer may have to provide on Form W-9:
Full name.
Address.
Tax classification (sole proprietorship, LLC, partnership, etc.).
Any tax reporting exemptions.
W-9 form 2023
The IRS published a draft version of the new W-9 for 2023 but has not yet made the draft official. The draft would add a new line 3b for those who choose "partnership" or "trust/estate," asking them to indicate whether the partnership, trust or estate has foreign partners, beneficiaries or owners.
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What is backup withholding?
Backup withholding requires businesses to put aside advance taxes for people who have had certain tax issues. These problems include not providing an accurate tax ID or failure to report interest or dividend income.
If you’re an independent contractor, you might be wondering: Does Form W-9 get reported to the IRS? In short, you are supposed to report all of your income — not just the money paid by larger clients. But once you get a 1099-NEC, which uses information from your W-9, you can be sure the IRS knows about the payments reported on that form.
Is Form W-9 different from Form W-4 and Form W-2?
The main difference between Form W-9 and Form W-4 is that Form W-9 is for independent contractors and other payments to people who are not employees, while Form W-4 is for more traditional employment relationships.
Though a lot of the information these forms collect is similar, they represent different types of business relationships. Notably, Form W-4 requests information used to calculate tax withholding.
Form W-2 is also more applicable to people in traditional employer/employee situations. The W-2 is what employers send to employees to provide pay records for use in completing a tax return.
