The form acts as an agreement that you are responsible for withholding your income as a contractor or freelancer. If you work full-time, your employer withholds a portion of your income to cover federal taxes on FICA income and taxes (including medicares and social contributions). Employers do not make this deduction for contractors. A W-9 form is essential for taxing if you are a contract worker, self-employed or self-employed person. The companies you work with must not deprive you of taxes on wage cheques and the W-9 agrees that you are solely responsible for paying these taxes. In this section, two options are available. You can enter either your Social Security Number (SSN) or your Employer Identification Number (EIN). As a general rule, you provide your NSS when you submit a file as an individual or LLC member. Use your UN if you classify a file as a multi-member LLC as a company or partnership.
If you are an individual contractor, you can use one of the two numbers, but your NSS is preferable. If you are cleared of the post notification required by the Foreign Account Tax Compliance Act (FACTA), complete the second line. The latter only applies if you keep your accounts outside the United States. If you manage your account in the U.S., you can leave the second line empty or write “N/A.” If you are unsure of your exceptions, page 3 of the form describes situations that would exempt you from tax. If you are asked to complete a W-9 form, you may receive a 1099 tax form from the person or company that pays you at some point in the future. This is similar to an employee`s W-2 form, but it`s much simpler because only your gross payments are displayed. If you are an independent contractor, consultant or other type of self-employed person, the company for which you offer a service will ask you to complete the INTERNAL Revenue Service`s W-9 form if your total compensation for the year exceeds $600. The company will use this form to complete its Form 1099-NEC, which tells the IRS how much of the revenue it has paid to non-employees. Form W-9 – application for tax identification and certification number – is a commonly used IRS form. If you have your own business or work as an independent contractor, a customer can request that you complete and send a W-9 so that they can accurately prepare your 1099-NEC form and report the payments it will be made to you at the end of the year. If you complete a W-9 before working as an independent contractor for a company, you are not considered an employee, although you could do the same type of work as a company. The differences can be very subtle, but in general, independent contractors have more control over when and how they perform tasks and do not receive any of the benefits of staff, such as.
B 401 (k) contribution comparison or health insurance. As an independent contractor, however, you can claim more deductions for expenses related to your work. B for example, maintaining a home office. If you can file the document in person, this is ideal. Otherwise, it is possible to use a free online service to encrypt your W-9 form and send it securely by email to the advertiser. You can also use an encrypted file-sharing service. The other boxes are C companies, S companies, partnership companies and fiduciary operations. You may even end up on the other side of the transaction if you are the one making the payments to an independent contractor.
You are responsible for purchasing the W-9s from the contractor and keeping a copy; However, there is no need to send it to the IRS.