Fillable W9 Form 2022 – In this guide, you will learn what W-9 is and its relevance to small and large businesses. We would also focus on how companies can make the process easy through e-signatures.
Getting to know the Form W-9
The W-9 form or IRS Form W-9 is a tax document used by the IRS to help measure the taxes owed in a tax year by a taxpayer. Form W-9 is used to obtain information about the contracted workers businesses pay and potential agreement with contractors that companies would not keep any income tax from pay. Mind you; contractors have to pay their taxes with this generated invoice.
The form is made up of 2 essential parts. The first part collects the identification data of the Payee. The second part is the authorization (signature) that confirms the accuracy of the identification information presented in the first part of the form. It is usually seen as a way to verify a person’s taxpayer identification number (TIN).
W-9 can be signed physically and electronically. The current business and work climate means doing things digitally is faster and saves workers and companies time.
When to request a W-9 form?
W-9 Form is essential for businesses that work with freelancers and contractors. Companies that pay contract workers or freelancers a minimum of $600 for each work done require a W-9 form.
Businesses are not required to pay Medicare or Social Security taxes to contractors. In addition, such companies are not required to withhold income taxes on payments to independent contractors. That is why the IRS seeks to know who businesses are paying to know the persons they want to collect from. Companies must ensure that W-9s forms are safely kept and are available at the end of the year to report the amount paid to each contract worker.
The information is needed on a W-9 form.
Businesses need to ensure contract workers accurately fill the form. The following is the information required on the W-9 form.
Business name/Payee Name (This comes into play when the person receiving payment is a business)
Payee’s federal tax classification
Ways payee will fill their taxes for the income. The Payee will mark the box that shows whether they are individual/sole proprietorship, partnership, Limited Liability Company (LLC), and so on.
The current mailing address of the Payee
Taxpayer identification number (TIN). The Social Security number (SSN) deputizes as the Tax Payer Identification Number for United States citizens. For businesses, the employer identification number deputizes as the taxpayer identification number. For residents, a specific individual taxpayer identification number plays the role of the tax identification number.
Some other areas that need filing on the form include the exempt payee code. This code is used to show that the Payee has an exemption from having taxes withheld.
Accuracy of W-9 forms.
A W-9 form is a susceptible form that requires accurate and valid information. It is essential businesses obtain the correct information from contract workers. The IRS website houses lots of helpful information about what is needed by enterprises when filing and submitting the form. It is essential to collect the correct documents from contract workers.
What happens to payees who don’t supply a correct W-9 form?
Companies that neglect their duties to provide a W-9 form can be liable to fines and penalties. In addition, such businesses may also face perjury for failing to provide the necessary information on a form.
What happens when you don’t obtain W-9 forms from their payees?
Suppose a contract worker fails to provide their Tax Identification Number. The IRS will ask the company to withhold tax of up to 28% of worker payments until the form is completed and submitted.