The IRS Form W-9 is one of the most common tax forms. Its primary purpose is to confirm the identity (e.g., full name, address, taxpayer identification details) of a person receiving income from another person (the requesting entity).
Become familiar with Form W-9 and the IRS regulations concerning it, learn who needs one, how to fill it out, what information is needed, and how to request one from another person.
What is a W-9?
A W-9 is a form filled out by independent contractors to provide tax information to the business employing them as long as they are paid $600 or more.
The form requires an individual to provide their name, address, tax qualification, and withholding requirements. This form serves as a guideline and gives the employer the information needed to fill out a Form 1099 at the end of the year.
When to Request a W-9 Form?
The IRS suggests a company should request a W-9 form when they hire an independent contractor, no matter the initial payment amount. If the company pays the contractor more than $600 per tax year, the company will then issue a Form 1099 at the end of the year for tax purposes. The W-9 ensures they have all the information they need for tax preparation. If a company pays a contractor less than $600, there is no need to file a Form 1099.
Example: If a company decides to have its website redesigned and the contractor charges $5,000, the company should request a W-9 from the contractor.
Who Can Request a W-9?
A person or business that hires an independent contractor or pays an individual over $600 in rent, sales, prizes, awards, and numerous other payment categories, may request a completed Form W-9 from that contractor as per the instructions on a Form 1099-MISC. Many entities can request a W-9; although this list isn’t inclusive, here are some of the most common examples.
Online Marketplace Platforms - Amazon, eBay, Etsy, etc.
Selling items using online platforms is a great way to make money, but it is still considered income and is taxable by the IRS.
Example: If you want to sell products on Amazon, you will need to provide a W-9 when you sign up. If your sales eclipse $600, Amazon will issue you a Form 1099.
Churches
Churches must also use Form 1099s to record their business transactions. Consequently, they must also issue W-9s.
Example: If a church pays $50 to an individual to have its lawn cut biweekly, that amounts to $1,300 a year. Since this is more than the $600 threshold, the church must issue a Form 1099 and request a W-9 from the person mowing the lawn.
Homeowners
Homeowners do not need to issue W-9s unless they work from home, claim the workspace on their taxes as a write-off, and are having work done to their home office.
Example: A homeowner that pays $3,000 for a new deck does not have to issue a W-9. The contractor or company hired is responsible for recording the payment in their taxes. If the homeowner pays $650 to a contractor to repaint their home office, the homeowner must issue the contractor a W-9 because the business owner can deduct the amount from their taxes.
Tenants in Commercial Leases
Paying a landlord more than $600 in a fiscal year should require a Form 1099 if the area is being used for commercial or business purposes. Tenants should ask the landlord for a W-9 before making lease payments.
Example: If a business pays over $600 annually to lease space in a building for commercial purposes, the landlord must issue a W-9 to the tenants. As long as the landlord is not taxed as a corporation, a Form 1099 is required.
Charities and Nonprofits
Charities and nonprofits must also request W-9s, provided their status as a charitable organization is represented on the form. Line 4 on the form allows the applicant to indicate whether the organization they represent is a charity or a nonprofit by entering the correct exempt payee code.
For instance, exempt payee code “13” applies to charitable trusts. These organizations must also possess an Employer Identification Number (EIN), which the applicant must fill out instead of an SSN in Part I of the form.
Example: If a charity hires an independent consultant to help improve their fundraising, they must issue that person a W-9.
Entertainment Venues or Bars
Entertainment venues will request a W-9 from a musician or band. The IRS considers freelance musicians independent contractors, so they must fill out a W-9 any time they receive money in exchange for their services.
Example: A bar hiring a musician or a band must request a W-9 if they pay them $600 or more over the tax year.
Insurance Companies
Insurance companies ask for W-9s to be filled out to ensure they have tax identification numbers on file, to report any income to the IRS, or to provide documentation of coverage to the IRS. But that does not mean you will receive a Form 1099 from them.
Example: An insurance company may request a W-9 when you receive a payment from a life insurance policy such as cash value life insurance or annuity to provide the IRS with a record of your income.
Freelance Platforms - Upwork, Fiverr, etc.
If you are an American citizen, freelance platforms require you to fill out a W-9 when signing up to report your income to the IRS.
Example: A freelance video editor who makes over $600 in all transactions on Upwork will be issued a Form 1099 at the end of the year.
Lawyers or Attorneys
Lawyers can both provide and require W-9s for their services.
Example: If you pay a lawyer more than $600 in one year, you must send a W-9 to the law firm, though one is usually provided by the firm when retaining services to ensure the lawyer is documenting their income.
Gig Companies - Uber, DoorDash, etc.
Like freelance platforms, to sign up with gig companies, you must fill out a W-9.
Example: Uber will send a driver a Form 1099 for tax purposes to report any tips, bonuses, referral payments, or other income if they make more than $20,000 in total revenue from Uber and provide more than 200 rides. Some states may have a lower income threshold.
Gig Companies - Uber, DoorDash, etc.
Like freelance platforms, to sign up with gig companies, you must fill out a W-9.
Example: Uber will send a driver a Form 1099 for tax purposes to report any tips, bonuses, referral payments, or other income if they make more than $20,000 in total revenue from Uber and provide more than 200 rides. Some states may have a lower income threshold.
Casinos and Betting Platforms - DraftKings, FanDuel, etc.
Most casinos and gambling sites will not require a W-9 when you initially sign up, but after a reportable win, they will ask you to fill out a W-9 to report your winnings to the IRS.
Example: A person places a bet on a sports betting website and earns $950 profit from the bet. Using the information provided when they sign up, the website will issue that person a Form 1099-MISC.
Estate Executors
When executing a will, an estate executor will ask the recipient to fill out a W-9 to ensure that taxes are paid on the income.
Example: An individual will inherit $10,000 from a relative, but before receiving it, they must fill out a W-9 form provided by the estate executor to properly track how much is owed in taxes.
Grantor Trusts
If a trust is legally considered a grantor trust for income tax purposes, the trust may issue a Form W-9 to verify the trustee’s Taxpayer Identification Numbers (TINs), as per the treasury regulations under section 1.671-4(b) of the Internal Revenue Code (U.S.C. Title 26).
Example: If a trustee chooses this income reporting method, a trustee must obtain a Form W-9 from the grantor to verify the grantor’s TIN, which should be their SSN.
What Happens When a Requester Can’t Obtain a W-9 Form From Their Contractor?
A contractor who refuses to fill out a W-9 could be subject to a $50 fine for each instance. You should always provide a W-9 when starting a business relationship. If a contractor refuses to provide a W-9, you must begin backup withholding.
To avoid possible fines, you must send the contractor the first annual solicitation by December 31st of the year you started doing business together. If they fail to provide a W-9 again, you will send a second annual solicitation and provide a W-9 the following year by December 31st. Make sure to document all three attempts as proof that you requested the form.
Even if the contractor refuses to send a W-9, you must still fill out a form 1099 for them. Since some information will be missing, you cannot fill it out online. Use a paper form to fill out any information and write “refused” in the tax identification number (TIN) box.
Example: James Alpha has hired John Bravo, an independent contractor, to perform work. Mr. Bravo was paid $880 for the job, making it mandatory for Mr. Alpha to report it on a Form 1099 and request a Form W-9 from Mr. Bravo. If Mr. Bravo refuses to send a completed Form W-9 back, Mr. Alpha must begin backup withholding immediately, document his attempts to request a Form W-9 from Mr. Bravo (including the annual solicitations), and report the refusal on a Form 1099 by writing “REFUSED” in the Tax Identification Number box.
Who is Required to Fill Out a Form W-9?
W-9s are becoming more common as businesses rely on independent contractors for labor. Independent contractors are not the only ones who must complete Form W-9s.
Freelancers, eCommerce sellers, and other categories of individuals who receive more than $600 from a person or a business that isn’t their employer must also fill out W-9s.
Below is a list of specific examples and possible situations where an individual may need to fill out a Form W-9, but it is not all-inclusive.
Independent Contractors
Individuals working as independent contractors hired by other individuals or other companies must fill out Form W-9s if they receive $600 or more for their services.
Example: Acme Corporation hires Gordon Smith, an independent IT technician, to perform maintenance and repairs on the company’s computer systems. Mr. Smith was paid $1,700 for his services. Because this amount exceeds the $600 threshold, Mr. Smith must fill out a Form W-9 and send it to Acme Corporation.
Online Marketplace Sellers on Amazon, eBay, Etsy, etc.
Online marketplaces and eCommerce websites, such as Amazon, eBay, or Etsy, may require U.S. persons signed up on their platforms to fill out a
Form W-9 if their yearly earnings exceed $600. Some platforms require signing the form as a condition for signing up, while others may withhold payment until the seller sends a filled-out W-9 back to the platform.
Example: Diana, a U.S. citizen and a resident of Boise, ID, has been a member of an eCommerce platform since 2018. That platform requires its members to fill out a Form W-9 if their yearly earnings exceed $600.
In 2021, Diana sold $984 worth of products by June, exceeding the $600 threshold for the first time since signing up. In response, the eCommerce platform temporarily withheld Diana’s payment, requesting she send a filled-out Form W-9 before receiving her earnings.
Freelancers for Upwork, Fiverr, etc.
Online freelance service marketplaces, such as Upwork or Fiverr, may require U.S. persons signed up on their platforms to fill out a Form W-9 if their yearly income exceeds $600. Like online marketplaces and eCommerce platforms, freelance service platforms can request the signing of a W-9 either as a sign-up condition or when the platform detects a member’s earnings exceeds the threshold.
Example: Joey is a U.S. citizen and a resident of Seattle, WA, meaning he meets the legal definition of a U.S. person for tax purposes (22 USC 6010). When signing up on a freelance marketplace platform, Joey is asked to specify whether he is a U.S. person. Clicking “Yes” means that if Joey earns more than $600 on that platform, the website may temporarily suspend payment until he submits a completed Form W-9.
Affiliate Partners
Individuals working as affiliate marketing partners for an eCommerce platform, such as the Amazon Affiliate Program, may also need to fill out a Form W-9 and send it back to the company they are partnering with if their yearly earnings are $600 or more.
Example: Marisa is a U.S. citizen residing in Reno, NV. She is the owner of a website that receives significant monthly traffic. As a member of the Amazon Affiliate Program, she receives commissions from Amazon for visitors that buy a product advertised on her site. Due to her status as a U.S. person, Marisa must complete the Tax Interview before she is allowed to access her earnings, which requires her to fill out a Form W-9.
Persons Receiving Miscellaneous Income
Miscellaneous income is legally defined as any taxable income that isn’t categorized as revenue, such as wages, dividends, compensation for services, or interest. The IRS includes rents, prizes, awards, medical payments, crop insurance proceeds, and numerous other examples in their definition of miscellaneous income.
Example: Rich, a U.S. citizen residing in Raleigh, NC, participates in an eSports tournament hosted in the United States and wins the top prize of $10,000. The money falls under the IRS’s definition of a prize or awards, making it taxable. Rich must report it to the IRS as miscellaneous income.
Persons Receiving Scholarships
Although the IRS considers scholarships and other education-based financial grants non-taxable, students receiving the scholarship may still be required to fill out a Form W-9. This is because some of the money used can be spent on taxable expenses, such as room and board.
Example: A student enrolling into a college may be tasked with submitting a Form W-9 in exchange for releasing the scholarship funds and completing the processing of tuition payments.
Adult Industry Contractors
Independent contractors earning more than $600 from a business in the adult industry will be required to fill out a Form W-9 and receive a Form 1099 at the end of the year. This definition includes U.S. persons registered creators on adults-only online platforms such as OnlyFans.
Example: OnlyFans considers all U.S. persons registered on their platforms to be contractors for tax purposes, as they are members of the platform managed by the company but not employees of the operating company.
Persons Receiving Lawsuit Settlement Income
According to the Internal Revenue Code Section 61, all income is taxable unless exempted by another tax regulation. IRC Section 104 provides more information regarding lawsuit settlements and what constitutes taxable income. If lawsuit settlement income does not enter one of these exceptions, it is taxable, and you may be required to fill out a W-9.
Example: According to IRC Section 104(a)(2), “the amount of any damages (other than punitive damages) received” can be excluded from gross income, meaning it is non-taxable. While this means non-compensatory damages received following a personal injury lawsuit are non-taxable, compensatory (punitive) damages remain taxable. They must be reported to the IRS using Form 1040 under “Other income.”
Persons Receiving Cancellation of Debt
Creditors canceling a debt may send the ex-debtor a Form 1099-C to officialize the amount that the ex-debtor no longer owes, provided the total debt amount is $600 or more. The IRS considers canceled debt taxable, except under specific circumstances. Consequently, the creditor may request a Form W-9 to confirm their Taxpayer Identification Number (TIN).
Example: Harold, a U.S. citizen, owes $2,000 to ABC Bank, a financial institution. Following negotiations, ABC Bank cancels Harold’s debt. To formalize the agreement, ABC Bank issues Harold two forms: Form 1099-C to describe the amount of canceled debt and Form W-9 to confirm Harold’s Taxpayer Identification Number. As Harold is an individual, he must input his SSN.
Landlords in Commercial Leases
If a landlord collects over $600 annually from a tenant, the landlord must send a Form W-9 to that tenant, and the tenant must fill it out and send it back to confirm their TIN.
Example: Mrs. Jones, an apartment landlord, collects $800 monthly from Mr. Kent, one of her tenants. Annually, Mrs. Jones collects a total of $9,600 in rent, far exceeding the $600 annual threshold. Consequently, Mrs. Jones requests a completed Form W-9 from Mr. Kent.
Charities and Nonprofits
Charities and nonprofits must fill out W-9 forms to be eligible for tax-exempt status.
Example: Stephanie recently started a nonprofit business providing counseling services. She charged a business client $800 for her service, who asked her to fill out a Form W-9 before beginning. Since she operates a nonprofit, she entered the code on the form indicating she was a nonprofit organization. Consequently, she also needed to enter her business’s Employer Identification Number (EIN) instead of her personal SSN.
Musicians or Bands
Musicians and bands are considered independent contractors and must fill out Form W-9s when they make more than $600 from a gig.
Example: Jonathan, a professional musician, is asked to perform at a bar every weekend during the month of June. He charges $250 daily for his performance, totaling $2,000 for the month. Because the total amount owed to Jonathan will exceed $600 at the end of the month, the bar issues him a Form W-9 to complete so they can send him a Form 1099 at the end of the year.
Hospitals and Medical Service Providers
Medical service providers, such as hospitals, clinics, or obstetricians, may request Form W-9s from their patient’s insurance companies to verify the Taxpayer Identification Number and ensure timely reimbursements.
Example: BCD Hospital provided care to Mrs. Albertson. In turn, Mrs. Albertson’s insurance company requests a completed Form W-9 from BCD Hospital before reimbursing her.
Construction Contractors or Handyman Service Providers
Handymen and construction contractors should expect to fill out a W-9 for clients they have worked for, provided the total amount charged for their work is $600 or more.
Example: A company has hired Stephen to repaint the outside of their office building for $1,200. Before he begins, the company emails Stephen with a request to fill out a W-9 since he will receive over $600 as an independent contractor.
Gig Economy Workers - Uber, DoorDash, Instacart Service Providers
Gig workers must file a W-9 form once they eclipse $600 with the parent company.
Example: Richard started working delivering food around New York City for a food delivery company. As soon as he made $600 with the company, he received an email asking him to fill out a W-9 form so they could file taxes properly.
Gambling, Lottery, and Bettor Winners
Winning more than $600 gambling, betting, or in the lottery will require you to fill out a W-9.
Example: Patrick recently started sports betting and managed to win $800 on one of his bets. Before he could cash out, he received a notification about an email requiring him to fill out a W-9 form. Since he won over $600, he must complete the form and send it back to the betting site he used.
YouTubers
YouTubers receive ad revenue directly from YouTube and will be asked to complete a W-9 upon reaching $600 received.
Example: Sarah’s YouTube channel recently gained popularity, and she has monetized her channel. She recently eclipsed $600 in yearly ad revenue, so YouTube sent her a Form W-9 to fill out.
Estate Heirs
The estate recipient must fill out a W-9 by the estate executor to file taxes properly.
Example: Chris is set to inherit an estate worth $10,000. Before inheriting the estate, the estate executor issued Chris a W-9 which he then filled out with his personal information.
Expense Reimbursement Receivers
Expense reimbursement receivers must fill out a W-9, according to the Chamber of Commerce.
Example: A volunteer for a soup kitchen helps deliver supplies with their vehicle. The standard mileage rate is $0.14 per mile or the full cost of gas and operating expenses used while volunteering. The volunteer ends up asking for $1,140 in reimbursement that year, so the volunteer must fill out a W-9.
Honorarium Payment Receivers
Despite their name, honorarium payment receivers must still fill out a W-9 and expect a Form 1099 at the end of the year if they made $600 or more.
Example: A graduate of Harvard returns to the college to give a lecture on political philosophy. The college grants the graduate an honorarium of $2,000 as a gesture of goodwill and appreciation. Before the lecture, the graduate should fill out a W-9 and provide it to the college.
What Happens to Payees Who Don’t Supply a Correct W-9 Form?
Filing an incorrect W-9 will result in a $50 fine for each incorrectly filed form unless the mistake was reasonable and without willful neglect. False statements with no reasonable basis can also result in the IRS issuing a $500 fine.
If the IRS finds that the payee has willfully submitted wrong information to neglect taxes, the payee is subject to criminal charges and can be taken to court and potentially jailed.
Example: If you have a typo on your W-9, you may get a $50 fine though usually there is a one-time exception. If you knowingly provide the wrong information, such as the incorrect name, you will receive a $500 fine. If there is a pattern of misinformation or you intend to commit fraud by changing withholding amounts, you may face jail time.
Who is Exempt from a W-9?
According to the IRS, there are 13 different exemptions from backup withholding on a W-9. Those exempt must still fill out the entire form, but on line 4 will enter the payee code that refers to their exemption.
501 Tax Exempt Organizations
Certain organizations are exempt from tax under section 501(a). For a complete list of organizations that meet this exemption, check section 501(c).
The United States Government
The United States and its agencies and organizations are exempt from tax on W-9s. These entities are all paid for by taxes, so there is no reason to tax them.
State Entities
States, the District of Columbia, a U.S. Commonwealth or possession, and their political subdivisions, agencies, and instrumentalities are exempt from taxes on form W-9s. These entities are exempt for the same reason as U.S. agencies; taxes pay for them, so taxing them does not make sense.
Foreign Governments
A foreign government and its political subdivisions, agencies, and instrumentalities is 100% tax-exempt. Governments do not have the right to tax each other as that would imply having power over the other.
Registered Corporations
Corporations are exempt from W-9s, but Limited Liability Companies (LLCs) are not. LLCs should expect to have to fill out W-9s over the course of their business.
Security or Commodities Businesses
Anyone that deals in securities or commodities registered in the United States, the District of Columbia, or a U.S. commonwealth or possession.
Registered Futures Commission Merchants
Futures commission merchants registered with the Commodity Futures Trading Commission are exempt from W-9s.
Real Estate Investment Trusts
Real estate investment trusts are exempt from W-9s because they instead use a Form 8612.
Entities Registered Under the Investment Company Act of 1929
Entities registered throughout the year under the Investment Company Act of 1940. This act is designed to protect the economy after the stock market crash of 1929.
Common Trust Funds
Common trust funds, as operated by banks under section 584(a). Common trust funds are not taxable on their income; the amount received by the participants is taxed instead.
Investment Custodian
A middleman in the investment community often called a nominee or custodian, does not need a W-9. Instead, W-9s are passed on to the person whose money has been invested.
Charitable Trusts
Section 664 or section 4947 trusts are exempt from W-9 taxes because they are charitable trusts.
When is a W-9 Not Required?
A W-9 form is not required if the receiving entity makes less than $600 during the fiscal year. Some vendors may still ask you to fill out a W-9 anyway because you could potentially make more than $600 with them.
You are also not required to issue a W-9 for non-business-related purposes. The contractor is responsible for reporting their income if they are not working with a business.
- When buying business supplies from a store
- When making upgrades to the home that are not business related.
Information Needed on Form W-9
A W-9 Form contains three sections: applicant’s personal information, Part I: Taxpayer Identification Number, and Part II: Certification.
Personal Information
This section features 7 subdivisions:
1. Applicant’s name: The applicant’s name as shown on their income tax return.
2. Business or entity name: If filing a Form W-9 on behalf of a business, enter the name of the business or disregarded entity.
3. Tax classification: Check the box that best corresponds to your situation: Individual/Sole proprietor or single-member LLC, C corporation, S corporation, Partnership, Trust/estate, LLC, or Other.
- Example: If filing on behalf of yourself, check “Individual/Sole proprietor or single-member LLC.” If filing on behalf of a trust or a family estate, check “Trust/estate.”
4. Exemptions: If you have an exempt payee code or an exemption from the FATCA reporting code, enter them in the fields below.
- Example: If filing on behalf of a real estate investment trust, you may be able to enter Exempt Payee Code 8.
5. Address: The address of the person or organization represented on this form.
6. City, State, ZIP code: The city, state, and ZIP code of the person or organization represented on this form.
7. Account numbers (optional): Some businesses may have multiple accounts, so you may need to specify an account number.
8. Requester’s name and address (optional): You may optionally fill out the name and address of the person or entity requesting a Form W-9 in this section.
Part I: Taxpayer Identification Number
Part I of Form W-9 requires the applicant to enter the Taxpayer Identification Number (TIN) in the appropriate field. Depending on the type of person or entity the form is for, the TIN may either be a Social Security Number (SSN) or a company’s Employer Identification Number (EIN).
Example: Jack Williams is authorized to file a Form W-9 on behalf of Acme Corporation, meaning he must fill in the company’s EIN. If he filed a Form W-9 as an individual instead, he would need to provide his SSN.
Part II: Certification
Part II requires the applicant to read and certify that the information provided on the form is correct and accurate, then cross out specific lines according to the instructions listed. The person filling the form out must then provide a date and a signature in the appropriate sections.
How to Fill Out a W-9
Follow this step-by-step guide to fill out a Form W-9 accurately.
Line 1: Name
If submitting as an individual, enter your full name as listed on your income tax return. If you have a TIN, enter your name as it is on your Form W-7 application. If entering as a sole proprietor or single-member LLC, enter your name as shown on your 1040/1040A/1040EZ. If you are filing as a Partnership, multiple-member LLC, C-Corp, or S-Corp enter the same name shown on your corresponding tax return.
Example: Jack Williams
Line 2: Business Name
If you are filing on behalf of your business or have been authorized by a business to file on their behalf, enter that business’s name.
Example: Acme Corporation
Line 3: Federal Tax Classification
Check the box corresponding to your federal tax classification or that of the business you are filing this form for, if applicable.
Example: Acme Corporation is an S corporation, so Mr. Williams ticks the corresponding box.
Line 4: Exemptions
If an exempt payee code or an exemption from the FATCA reporting code applies, enter either in this section, or leave blank if none.
Example: Acme Corporation is a corporation, so exempt payee code 5 applies.
Line 5: Street Address
If filing as an individual, enter your address. If filing on behalf of a business, enter the business’s mailing address. Leave out the city, state, and ZIP code from this line.
Example: 1234 Abecee St.
Line 6: City, State, and Zip Code
If filing as an individual, enter your city, state, and ZIP code. If filing on behalf of a business, enter the business’s city, state, and ZIP code.
Example: Goodsprings, NV, 89019
Line 7: Account Numbers
This section is only needed if the business has multiple accounts. You should enter the information to specify the correct account for tax reporting purposes.
Requester’s Name and Address
This section is optional. If you fill it out, enter the requester’s full name and address.
Example: Ajax & Co., 5678 Def Ave., Las Vegas, NV, 88901
Part I - TIN
Enter the appropriate Tax Identification Number for the entity represented on this form. If filing as an individual, sole proprietor without an EIN, or single-member LLC, enter your SSN. If filing on behalf of a company with at least one employee, a sole proprietor with an EIN, a corporation, or a partnership, enter their Employer Identification Number (EIN).
Example: Acme Corporation is an S corporation, meaning Mr. Williams must fill out this section with the company’s EIN: two numbers, a dash, and seven numbers (e.g., 00-0000000).
Part II - Certification
Read the certification instructions, cross out Line 2 if you or the entity you represent have received an IRS notification of backup withholding, then input your signature and the filing date.
Should I Enter an SSN or EIN on a Form W-9?
Who Needs to Enter a Social Security Number (SSN)
When completing Part I on a Form W-9, the filing individual must provide a Taxpayer Identification Number (TIN). For most applicants, that number is their Social Security Number (SSN).
Individual U.S. Citizens
If the applicant is a U.S. citizen that doesn’t run or operate a business, they must provide their SSN.
Example: John Smith, a U.S. citizen and resident of Miami, FL, must enter his SSN in Part I of a Form W-9.
SSN-Eligible Non-Citizens
Lawful permanent residents (Green Card holders) and non-citizens authorized by the DHS to work in the United States may receive an SSN, allowing them to enter it when filling out a Form W-9.
Example: Lian Zhang is a Green Card holder. When applying for her visa, she requested an SSN card, receiving it by mail when arriving in the United States. This allows her to enter the number on the card when completing a Form W-9.
Sole Proprietors Without an EIN
Individuals with a sole proprietorship status must enter their SSN into a Form W-9 if they haven’t yet received or applied for an EIN.
Example: David Johnson is the sole proprietor of Johnson Solutions, an unincorporated business. David hasn’t yet filed a Form SS-4 to apply for an Employer Identification Number, meaning he must enter his SSN on a Form W-9 instead.
Disregarded Entities
In the case of a Single-Member Limited-Liability Corporation (SMLLC) that hasn’t elected to be treated as a corporation or a partnership, the IRS considers it a disregarded entity. In this instance, the SMLLC owner must enter their SSN into a Form W-9.
Example: Paul Finch is Finch Consulting, LLC’s owner and sole member. Finch Consulting is an SMLLC and a disregarded entity, meaning Mr. Finch must enter their SSN into Part I of a Form W-9 instead of Finch Consulting’s EIN.
Who Needs to Enter an Employer Identification Number (EIN)
W-9 forms have sections for either an SSN or EIN. Most independent contractors use their SSN. But an Employer Identification Number (EIN) may be needed instead of their Social Security Number in two instances. Below are examples of entities that can enter an EIN when filing a W-9.
Entities With At Least One Employee
Any entity with at least one employee must possess an Employer Identification Number (EIN). When filing a Form W-9, they must use the EIN section in Part I instead of the SSN section.
Example: Alpha Incorporated is a company with 25 employees. A person in charge of filing a Form W-9 on behalf of the company must enter the EIN instead of their SSN in Part I.
Corporations and Partnerships
The IRS requires all corporations and partnerships to apply for an Employer Identification Number.
Example: Hamlin, Hamlin & McGill is a company operating as a partnership, where each of the three founding partners has equal responsibility and ownership percentage. That partnership must obtain an EIN and use them on Form W-9s.
Sole Proprietors with an EIN (Optional)
Individuals with a sole proprietorship status who have filed a Form SS-4 and received an Employer Identification Number have the option to enter their EIN instead of their SSN.
Example: After filing a Form SS-4 to the IRS and waiting four weeks, David Johnson, sole proprietor of Johnson Solutions, received a new Employer Identification Number in the mail. Mr. Johnson can now use his new EIN when filing a Form W-9, although he retains the right to continue using his SSN.
Penalties for Non-Compliant Form W-9
Avoiding making mistakes while filling out an IRS Form W-9 is crucial. Entering false information constitutes an information return penalty, starting at $50 per erroneous information for the first 30 days. If the supplied false information hasn’t been corrected within 30 days, the penalty amount increases to $50 through August 1, then to $110 if it still hasn’t been corrected after August 1.
If the IRS determines the applicant deliberately entered the false information, it constitutes Intentional Disregard, and the penalty increases to $570.
Tips and Considerations When Providing a W-9
Because a W-9 is an official government form that carries fines or penalties if incorrectly filled out or lost, there are a few tips and considerations to consider when preparing one for a contractor.
Take Your Time
While a W-9 looks straightforward, there are many instructions and sometimes unclear questions. When filling out a W-9, ensure you aren’t misreading a question, answering incorrectly, or skipping important sections.
Double-Check Before Sending
Even after filling out the form, do not send it until you are 100% sure that you have correctly entered all details. Check spelling and grammar multiple times. If you filled out a paper version of the form, ensure your handwriting is readable.
Save a Secure Copy
Form W-9s have no expiration date, meaning their validity lasts as long as the information filled out on it is correct. Saving a copy of it for later access and review can help you save time. Keep an electronic copy of your form (e.g., e-form) saved on your computer, preferably secured using encryption or another data security measure.
How Do I Know if I Am Subject to Backup Withholding?
According to the IRS, you may be subject to backup withholding in four specific cases:
- Failure to provide a Taxpayer Identification Number (TIN) to a payer
- The TIN you provided to the payer is incorrect
- Under-reporting interest or dividends on your income tax return (after the IRS has sent you four notices over a 120-day period or less)
- Failure to certify your status as not subject to backup withholding for under-reporting interest and dividends
What is the Most Secure Way to Submit a Form W-9?
Form W-9s are available in two formats: paper and electronic.
Securely Sending a Paper Form
If you submit your Form W-9 in paper format, directly delivering it to a payer or an entity requesting it from you is the fastest and the most secure method. It ensures that you retain physical control of the form at all times until delivered, without relying on a third party (e.g., a courier service), where your envelope could be lost, stolen, or tampered with by a malicious third party.
Securely Sending an Electronic W-9
The safest way to send an electronic version of your Form W-9 is to use a free encryption service to encrypt the email. Then email the encrypted file and send the decrypting password in a separate email. Alternatively, you and the requesting entity may use a secure file-sharing platform to send and receive the electronic form.
What Happens if I Refuse to Fill Out a Form W-9?
If you refuse to fill out a Form W-9 in response to an entity with a legitimate request, the requesting entity must withhold taxes from your salary using a flat 24% rate. Additionally, you risk heavy penalties from the IRS.
You should only consider refusing to send a Form W-9 if you suspect the entity requesting it may be illegitimate due to the sensitive nature of the personal information found on such forms. If you are in doubt, contact a tax professional for guidance.
FAQs
Here are the answers to some common questions about W-9s.
Digital copies of the W-9 form are available on the IRS website. The form can be printed and signed by hand or filled out digitally and e-signed.
Yes. Companies hiring individuals with any self-employed status (e.g., gig worker, independent contractor) may request a W-9 form from them.
You don’t need to pay taxes on a W-9. However, if the IRS considers your income subject to backup withholding, the flat rate is 24%.
A W-9 worker (also known as a 1099 worker) is a self-employed individual. Examples include independent contractors, consultants, and freelancers.
Individuals making donations to charitable organizations do not need to fill out a W-9 form. Some donations may be tax deductible and covered by other forms, depending on the type and amounts donated.
A Form W-9 does not expire and is valid indefinitely until the information on the form is no longer correct, at which point a new form with the correct information must be submitted.
One of the primary purposes of issuing a Form W-9 is to issue a Taxpayer Identification Number (TIN). If a contractor cannot or refuses to provide a TIN, the IRS recommends initiating backup withholding until they provide one.
The IRS considers a sole proprietor an individual who owns an unincorporated business without help, as long as the business isn’t an LLC run as a C-corporation.
The IRS treats single-member limited-liability corporations (SMLLCs) as disregarded entities unless the owner has applied for it to be treated as a corporation or a partnership.
Banks typically request Form W-9s to obtain specific personal data, such as full names, addresses, and TINs. They also use the information to report any income you receive to the IRS, such as interest, dividends, capital gains, royalties, and debt cancellation.
An exempt payee code is an identification number used to identify entities exempt from backup withholding. Page 3 of Form W-9 lists 13 types of entities, each with its own code number (e.g., 11 for a financial institution). The code can be included on page 4 of the W-9.
Only a U.S. person can sign a W-9 Form. The U.S. person signing a W-9 on behalf of a nonprofit must either be the owner or have the organization’s consent to sign the form.
