For those that are independent contractors, as well as for people that work for themselves, a W9 Form is needed to report their Social Security Number or Business Tax Identification Number to their clients. This is a pretty cut and dry scrap of paper when it comes to government forms. You'll simply need to provide your name, your address, as well as your Social Security Number (or your Employer Identification Number, for those that are contractors and are therefore considered another business entity all of their own).
Besides the above info, an IRS W9 Form will also ask whether or not you are subject to backup withholding. What is “backup withholding,” you could ask. Well, that's withholding at a fixed rate of twenty-eight percent on payments made to you or your business under certain circumstances. There are two commonplace reasons for using backup withholding. 1 explanation is if your name and Social Security Number does not match the name and Social Security Number that the IRS has on file for you. Another reason would be if you have outstanding tax debt. In this case the IRS would have told you that you are subject to mandatory backup withholding until the outstanding tax debt is totally paid for.
During the tax season of the year, contractors will be getting W9 forms to finish. Since during that time of the year, clients are getting ready to send out their 1099 forms. The 1099 Form is used to report self-employment revenue.
Other places you could be getting a W9 from are brokers and finance institutions. They might ask for a W9 if you may earn interest revenue, dividends, or trading stocks and other securities. As well as the usual places some people may receive requests for the W9 form from more peculiar places like landlords and people or companies. This is employed to ask, officially, from someone or business their name, address, and taxpayer identification number for the asking for party to correctly issue tax documents to the IRS.
As a general rule, any sort of business that requests a W9 Form is one that pays you interest, generally, the types of enterprises that request Form W-9 is any business that pays you reportable revenue. However if you should happen to feel that you have received this form from a bizarre source you must ask them why they're requesting the form and what they will be using it for.
What about foreign subcontractors? With foreign sub-contractors A W9 isn't needed, it is just wanted to gather info from US people and companies. However if you have a foreign contractor that is working for you, they will most probably be required to fill out one of the assorted W8 Forms.