Any freelancer or independent worker must have come across the following situation: some client may refuse to pay you for the services you provided until something called a W-9 is filled out and handed to the client. In reality, you can be often asked to complete IRS W-9 so that to aid businesses you independently work with to collect key information in order to prepare information returns for the IRS directly. You should do this to openly claim your income, businesses should care about download W-9s to claim external payments which are free from taxes like insurance.
A universal blank
Whether you are just a vendor or an organization, this fillable form will be a single blank for both formations. As a contractor you provide your social security number in case you operate as an individual – business entities are required to enter their employer identification number. The form also has fields for withholding and tax exemptions where you write in more specific tax details as the percentage of income held and codes to indicate that you as an organization do not claim additional taxes on payments. 2020 W-9 form can be found on the official Internal Revenue Service website. W-9s remain the same for all the states.
1099 vs. W-9: easily confused
IRS 1099-MISC and W-9 are usually confused because they technically serve for the same purpose with one key difference between them: 1099-MISC reports the overall income from some given source over the year whereas W-9 is designed to claim a single partnership exceeding $600 in payment. 1099-MISC is comprised of W-9 collected throughout the annual period and then handed over to the IRS. W-9s, in turn, are analogs for a W-4s which are used for formally employed workers.