Can one of the most simple tax forms be confusing? For some reason thousand of people keep asking questions on tax forums, they consult with lawyer and call IRS directly. The truth is out there?
Like rainy day in California — time to read the W9 itself or Instructions for the Requester does not come along very often. So here are brief that will make you confident about W9 in two ticks.
In case you think it’s not that easy to keep in mind all W forms meaning — split all of them by the purpose. W9 was specifically created for independent contractors (not employees) to deliver certain kind of information to the person calling the tune.
If you are a freelancer, consultant or part-time worker (chimney-sweeper, roofer, building contractor, etc.) — it’s important to fill this blank out so company can prove that they don’t have any payroll taxes left from what they paid to you.
This is not something to throw away?
Some of the contractors have never received the request to complete the document. Keep in mind that some organizations are free from TIN reporting. So due some of the payments they do, so please check if payee is exempt. Otherwise vendor must supply you with TIN, and if case they do not — make sure to start backup withholding in amount of 28% from general payment.
One step forward — refuse to complete
Vice versa scenario is the same pain in the neck. Writable form is waiting to be filled out for several weeks? This situation is rather risky since any business that fails to provide 1099 may be sure they are up to face penalties. If you came across a refuse — start money hold back immediately and notify IRS. Put your business on the first place — don’t wait till contractor will finally make their mind to do the document job, since 1099 has time deadlines. That’s why some of the lines have an option to notify IRS immediately by writing ‘refused to provide’. It’s never late to find out reason why someone doesn’t want to pay their taxes.