However, if the IRS considers your income subject to backup withholding, the flat rate is 24%. Read the certification instructions, cross out Line 2 if you Food Truck Accounting or the entity you represent have received an IRS notification of backup withholding, then input your signature and the filing date. 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. According to the IRS, there are 13 different exemptions from backup withholding on a W-9.

Who Needs to Enter a Social Security Number (SSN)

• 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.
• Now, some sole proprietorships also have EINs, but the IRS prefers that sole proprietors use their SSNs on Form W-9.
• The estate recipient must fill out a W-9 by the estate executor to file taxes properly.
• Many entities can request a W-9; although this list isn’t inclusive, here are some of the most common examples.
• In addition, you have the option to list relevant account numbers at the end of this top section of the Form W-9.
• 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.

As this information may get logged into their accounting system when you get set up as a supplier in their records, this address may be used to furnish your 1099 or mail you other important tax documents. The W-9 differs from a W-4 Form—which is more commonly supplied by employees to direct employers—in that the W-9 does not inherently arrange for the withholding of any taxes due. If you’re not retained earnings balance sheet sure of your business type, you’re probably a sole proprietor, but check with your attorney or tax advisor to be sure. Depending on your circumstance, select the most appropriate federal tax classification on line 3 for the name entered on line 1. Though a lot of the information these forms collect is similar, they represent different types of business relationships. Notably, Form W-4 requests information used to calculate tax withholding.

Personal Information

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. Creditors canceling a debt may send the ex-debtor a Form fedex w9 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).

Who Needs to Complete Form W-9?

Form W-9 is one of the most straightforward IRS forms to complete, but if tax forms make you nervous, don’t worry. If you’re a sole proprietor, enter your Social Security number in Part I even if you have an EIN. Your certification states that you are a U.S. citizen, other U.S. person or resident alien. If you are preparing your W-9 as a joint account, only the person whose TIN shows in Part I should sign. If completing your W-9 as a business, use this line to provide the information.

When to Request a W-9 Form?

Any required taxes based on gains related to the provided W-9 are the responsibility of the TIN holder listed on the document unless the taxpayer is subject to backup withholding. If backup withholding is required, this will need to be noted on the W-9, to properly inform the entity receiving the information of the need to withhold accordingly. Most individuals and business types are not exempt from backup withholding, but your business might be exempt from backup withholding for certain payments if it’s a corporation. You must get a W-4 form for non-employees (independent contractors, freelancers, and others) before the person is hired and before the work begins.

In this instance, the SMLLC owner must enter their SSN into a Form W-9. If filing on behalf of a business, enter the business’s city, state, and ZIP code. 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). Commonwealth or possession, and their political subdivisions, agencies, and instrumentalities are exempt from taxes on form W-9s.

When is a W-9 Form Necessary?

It’s important to fill out the form correctly as you may be subject to penalties if it is completed incorrectly; however, all of the information should be relatively easy for you to obtain. Be mindful of how you distribute the form to the requesting party, and take care of protecting your sensitive information and accurate tax reporting status. This might have happened if you didn’t report all your interest and dividends on a previous tax return. If you haven’t received this letter, and if you provide your tax identification number to the requester of Form W-9, then you are not subject to backup withholding.

How to Complete the Easier W-9 Form

• You can read more about our editorial guidelines and our products and services review methodology.
• 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.
• Now, if you read the fine print in the W-9 instructions carefully, it seems to indicate that most people aren’t required to sign this form at all.
• A 1099 form contains information about any income that may have been received by the TIN holder that would not normally be listed on a W-2.
• Individuals making donations to charitable organizations do not need to fill out a W-9 form.
• We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct.

In addition, the business requesting the tax information must safely secure copies of the form. Should you choose not to furnish a Form W-9 or if the information provided is incorrect, a 24% withholding tax will be taken from future payments you receive from your client. In addition, there are penalties and fees for intentionally failing to furnish correct information or misuse of TINs.