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The W-9 form: What you need to know about this common IRS tax form.
Discover what a W-9 is and why both small and large businesses doing business with contractors need to collect them. Learn how to simplify the process with e-signatures.
The purpose of Form W-9.
IRS Form W-9, also known as a W9, is one of the many tax documents required by the IRS (Internal Revenue Service) to help accurately estimate the taxes owed by contract workers in a given tax year. It’s a request for information about the contractors you pay as well as an agreement with those contractors that you won’t be withholding income tax from their pay — contractors must pay their own taxes on this income.
A W-9 form includes two parts. Part I is identification data about the payee. Part II is the certification, or signature, confirming that the ID info is correct. It can be called a “request for taxpayer identification number and certification” but “W-9” is more typically used.
W-9s can be e-signed and sent back to you digitally, saving time for contract workers and companies alike.
When to request a W-9 form.
Form W-9 is essential for doing business with independent contractors and freelance workers. If your company pays people or small businesses more than $600 each for completed work, and those people aren’t employed by you, you need to collect a W-9 for tax purposes.
Your company is not required to pay the Social Security or Medicare taxes or withhold income taxes on payments to independent contractors. Because of this, the IRS needs to know who you’re paying so they know who to collect from. Keep your W-9s stored securely and use them at year’s end to report how much you paid each contractor.
Information required on a W-9 form.
Before you file this information, check that your contractor has filled out all the required items.
- Name of the payee or their business name. For a business, this name must match the name entered on the legal LLC formation documents, unless it is an individual/sole proprietorship or single-member LLC (also known as a “disregarded entity” by the IRS.)
- The payee’s federal tax classification or how they plan on filing their taxes for this income. The payee will check the appropriate box for one of the following: individual/sole proprietorship or single-member LLC, C corporation, S corporation, partnership, trust/estate, limited liability company (LLC), or other.
- The payee’s full current mailing address.
- The payee’s taxpayer identification number (TIN). For US citizens operating as an individual or sole proprietor, this is generally their SSN (social security number). For other entities and businesses, the TIN will be the employer identification number that is associated with their business name. And for resident aliens, a special individual taxpayer identification number (ITIN) must be applied for.
- Less commonly used fields include exempt payee code, which is used to notify the requester that the payee is exempt from having taxes withheld.
Accuracy of W-9 forms.
It’s important to collect valid and complete forms from your contractors, just as it’s necessary to supply correct W-9s when you or your company is paid for work. If you have any doubts about what’s required for your business, visit the IRS website for more detailed instructions.
What happens to payees who don’t supply a correct W-9 form?
Say you have a contractor who submits a W9 to you with an incorrect TIN, or their form is missing a TIN altogether. If your company is the payee, it can be fined if it refuses to provide a W-9. You may also face penalties of perjury as the result of a failure to provide correct information on a W-9, such as the correct taxpayer identification number.
What happens to requesters who don’t obtain W-9 forms from their payees?
If you have a contractor who won’t provide their TIN, the IRS requires that you start withholding tax money (28% of your payments to that contractor) until you receive the completed W-9. There are penalties for failing to submit backup withholding to the IRS. Avoid withholding altogether by requiring completed W-9s from freelance workers.
Other common IRS tax forms.
Businesses must use Form 1099-MISC at the end of the year to report the total amount of non-employee compensation paid to a contractor. The MISC refers to miscellaneous income earned by freelance or self-employed workers. There are many types of 1099 forms used to report income to the IRS, such as income earned through interest on a bank account with a financial institution, cancellation of debt, proceeds from real estate transactions or mortgage interest, and more.
This form serves the same purpose as a W-9 but for your regularly employed workers for whom your company pays social security and income taxes. Have all new employees sign this form to verify their personal tax situation (tax exemptions, status, etc.), so you know the correct amount to withhold from their paycheck.
A W-2 is similar to the 1099-MISC, except in regard to your W-4 employees. Like the 1099, it’s part of the “information return” your company must provide to the government. The W-2 names how much was paid to those employees that year and how much was withheld for their taxes, Medicare, and Social Security. It should be given to the employee and the Social Security Administration (who then passes it to the IRS), and it helps ensure your employees receive any income tax return owed to them.
Download a free W-9 form.
Send a blank W-9 form to your contractors digitally to make it easy for them to fill it out and send back. The Adobe Acrobat Sign Library contains free downloadable templates for Form W-9 and other important tax documents you might need to send, like the Form W-4 and the IRS I-9 Employment Eligibility Verification.
Have more W-9 form questions? We’ve got the answers.
Do I need to send in a W-9 if I’m a freelancer?
What is a W-9 for a business?
A W-9 for a business entity contains information about the amounts paid to that business (either a single-member LLC or limited partnership LLC) by another business during a calendar year. It contains the same basic information as an individual’s W-9, but rather than having personal names and information, it instead lists the business’s legal name, address and Employee Identification Number (not TIN) number.
W-9 vs. 1099 tax forms: What’s the difference?
A Form W-9 is what an independent contractor, freelancer, or consultant fills out and provides to the employer for that business to keep for their records. A Form 1099 details the wages an employer pays to an independent contractor. Businesses provide the 1099 to the contractor so that they can file it with the IRS and state tax authorities.
How do I fill out a W-9 as an LLC?
As an LLC, you'll provide the same type of information on a W-9 as individual contractors, but with two differences:
- In the form’s tax classification box, if you’re taxed as a disregarded entity (see the definition above), check the "individual/sole proprietor" box, not the limited liability company box. If you’re an LLC with more than one owner, you’re automatically taxed as a partnership and should select the LLC box, using the letter P for partnership.
- Instead of entering a personal TIN, enter your EIN. This taxpayer identification number operates like a Social Security Number (SSN) for businesses and is required if the business has employees, is taxed, or operates as a corporation. You can get a free EIN from the IRS online, over the phone, or through the mail.
Adobe Acrobat Sign makes collecting W-9 forms easy.
For business owners, time-saving digital processes for W-9s and employment contracts are a must. Merck KGaA wanted to alleviate administrative headaches so employees could spend more time on issues than paperwork. By implementing an electronic signature process with Adobe Acrobat Sign, they saw a 1,400% increase in faster time to signature.
When it comes to collecting and securely storing important documents like W-9 forms, Adobe Acrobat Sign removes the steps of printing out and filing physical paperwork, resulting in faster turnarounds. Plus, you can store completed forms securely in Adobe Document Cloud for easier access to critical information.
Simplify forms with Adobe Acrobat Sign