With the United States Tax Season coming near, it is advisable to start collecting the necessary information to avoid any penalties. The income taxes of employees are often withheld during their paychecks. On the other hand, employers must fill out additional forms, including Form W-9.
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A sample of Form W-9
The Form W-9 is a formal request for information and is used by the IRS to confirm a person’s, name, address, and taxpayer identification number (TIN) or social security number (SSN). It is often used to create a version of Form 1099, which contains information about any income the TIN holder may have received. Form 1099 is required to be issued once the minimum income threshold of 600 dollars is reached; an amount below the threshold does not require this form.
The W-9 form is usually asked for by a bank or lending institution when processing to open a new account. Participants in a contest must also fill out the form, as the prize can be considered taxable income and required for IRS reporting.
Filling out W-9 is often the responsibility of the employer. Employees must provide necessary information to their direct employers. Generally, Form W-9 must be filled out by independent contractors, including freelance workers or gig employees, who perform work for another party they are not employed to. Independent contractors are required to provide W-9 if they earn over 600 dollars without being hired as an official employee. If a W-9 is not provided or the information is incorrect, the client must withhold a 24% tax rate from future payments.
The 2023 W-9 form can be accessed on the IRS website, which also provides a comprehensive document on the details of the form and instructions on filling out the form.
