Form W-9: What is it and what is it for?

Filling out tax return forms to the IRS (Internal Revenue Service) is a process that requires attention and care as there is a wide range of questionnaires and information that must be reported. In the case of service providers, there are some specific documents that must be up to date. This is the case with the W-9 form.

The W-9 form, also known as “Request for Taxpayer Identification Number and Certification,” needs to be filled out by independent employers, self-employed service providers or a company that provides services to another company, the so-called “contractors” and “subcontractors.” It is an Internal Revenue Service (IRS) form and must be provided by the contractor to the client who, based on the information obtained therein, will certainly issue a Form 1099-NEC to inform the contractor and also the IRS of the total amount paid during the fiscal year to the respective service provider.

Who does the W-9 form apply to?

There are four situations in which a W-9 is required:

  1. When hiring a freelancer: this is the most common case of W-9 withdrawal. When a company hires self-employed professionals, US tax residents, or other US companies to provide services, it must request the provision of a W-9 prior to the commencement of employment.
  2. In the case of opening bank accounts: Banking institutions must, in some cases, send information about their customers to the IRS. This is what happens when interest is collected throughout the year. In this context, the W-9 can be used to collect this information.
  3. When canceling debts:If a creditor cancels a customer’s debt, the amount of the canceled debt can be included in taxable income.Therefore, the creditor must submit information to the IRS using the information on the W-9 form.
  4. In investment companies: Investment firms may request a W-9 from clients to report to the IRS information relating to earnings or dividends earned by the investor.

What information is required on a W-9 form?

The W-9 is used to collect each taxpayer’s private information: name, address, and identification number (employer identification numbers for businesses (EIN) and Social Security numbers for individuals (SSN)). You must also state whether your business has a trade name, and also what the tax classification of the business or company is (if it is a limited-liability sole proprietorship or sole proprietorship, if it is a C-Corporation, S-Corporation, Partnership, Trust or Estate, or yet another type of organization).

Is there a deadline for submitting a W-9 form?

Since the W-9 is not collected directly by the IRS, there is no specific deadline for filling out the form. However, there is a deadline for filing out the Form 1099. The contracting company must, obligatorily, send the form 1099-NEC to its contractors and to the IRS by the last working day of January of the year following the fiscal year in question, so that taxpayers can report their revenues from the provision services on their respective tax returns to the IRS.

Because it is a form that can often raise questions, it is best to have the help of a professional accountant to fill out  the document. Need help filling out your W-9 form? Please, contact us. We’ll be happy to help you!