Appropriate Use of Form W-9Tax Professionals Resource
September 27, 2012 — 1,805 views
A W-9 form is a request for a person or entity's taxpayer identification
number, or TIN. This information is used to send accurate tax documents to the
IRS. The first thing to understand is that W-9 forms aren't filed with the IRS.
They are used to prepare 1099 forms, which are filed with the IRS. A 1099 form
is used to inform the IRS about payments that have been made to individuals.
The IRS uses 1099 forms to ensure that independent contractors and others are
paying their taxes. Learn more about the appropriate use of form W-9 below.
Form W-9 is extremely simple. Only a small amount of information is needed. A
person needs to provide his name, current address and Social Security number.
In some cases, a person might provide an employer identification number, or
EIN, instead. Either identification number may be given. The person who fills
out the form must certify that he is providing accurate information. There is
also a section of the form that refers to withholding taxes. If a person owes
back taxes, or if the name he supplies on his tax documents doesn't match the
name on his Social Security card, he may be subject to a 28-percent withholding
tax, and that must be reflected on the W-9 form.
Who Issues W-9 Forms?
The most common reason for a W-9 form to be issued is when a client requires a
freelancer or contractor's information for tax purposes. Under such
circumstances, taxes are not automatically withheld. At the end of the year,
the employer must submit a 1099 form to the IRS that documents the amount that
was paid to an independent contractor. It is important for the 1099 form to
contain accurate information, and that is the goal of the W-9 form.
Financial institutions and brokers also occasionally issue W-9 forms. If you
have earned interest income, dividends or have traded securities or stocks, the
institution or broker will need to issue a 1099 to the IRS to reflect those
payments. Like employers, these institutions and brokers use form W-9 to ensure
that they have accurate information about taxpayers. By confirming the accuracy
of this information, they can minimize the risk of running into problems during
If you are asked to submit a W-9 form by someone other than a client, financial
institution or broker, ask why it is needed. There are few other occasions in
which it is appropriate to request one.