IRS Form W9 – When & Why You Need It.

If you’re an independent contractor and/or perform freelance work your employer probably requires you to fill out IRS Form W9. The formal name for a W9 is the Request For Taxpayer Identification Number and Certification – and that’s exactly what it is. A company uses the information provided on the W9 to complete a 1099 form which allows the IRS to track your yearly income and calculate your tax obligation. In addition, a bank or financial institution may require you to complete a W9 to report income earned from investments to the IRS. Here is some guidance for those new to filling out IRS Form W9.

What information will you need to complete IRS Form W9?

The information you’ll need to complete a W9 is very basic. First, you’ll need to provide your name. Then you’ll need your tax ID number which for most is their social security number. However, in some cases, an ITIN or another type of government issued tax ID number is used in place of a social security number. That’s all the information you’ll need, filling out the rest of the W9 is really quite straightforward. At the end of each year, you’ll receive a separate 1099 from every employer you worked for during the year along with exactly how much you earned.

Form 1099.

IRS Form 1099 is very similar to a W-2 because the IRS uses both of them to track an individual’s income. However, a 1099 form is much simpler than a W-2 because it only lists gross income without any deductions. Therefore you will need to itemize your deductions and list all expenses yourself if you want to minimize your tax obligation. Often hiring a tax professional who is knowledgeable of the latest tax laws is the best way to be sure you’re paying the proper amount of taxes.

If you have any questions about when to fill out IRS Form W9 or need assistance completing your 1099 contact the tax professionals at USA Tax Prep today!