What is a Form W-9 and why should I being using it?
Most people have heard of a W-2, the form we receive in January that shows how much we were paid in wages and how much was deducted for federal and state income taxes, but most people don’t know what a W-9 is and what it’s purpose is.
The W-9 is an IRS form titled “Request for Taxpayer identification Number and Certification”. Copies of the form can be obtained from the IRS website; http://www.irs.gov.This form should be used by a taxpayer who is required to file an information return with the IRS to obtain the correct taxpayer name, address, and identification number. The most common information return we see it used for is the Form 1099. The Form 1099 is used to report payments to subcontractors, payments for services performed by people not treated as employees, payments to attorneys, interest payments, and rent payments usually in the amount of $600 or more per year.
Many times these reportable payments are made throughout the year and then when it’s time to prepare the 1099s in January the taxpayer does not have the identification number for the entities they made payments to. When the taxpayer begins business with a subcontractor or begins paying rent to a landlord the taxpayer should give them a W-9 to fill out.
Now is a good time for taxpayers to look at their payees to determine which ones will require a Form 1099. The taxpayer should check their files to make sure they have a current W-9 completed to ensure that when the information return is filed it will be correct. No one likes receiving notices from the IRS. By having a completed W-9 for your subcontractors and landlords you can save many headaches in January. If you have any questions about Form W-9 or Form 1099 please contact someone at our office and we will be happy to answer your questions.