IRS W-9 Form 2024, What is it? Get the Complete Details!

The businesses are generally required to file the IRS W-9 Form to get tax information from other parties. IRS W-9 Form allows individuals or businesses to provide their Taxpayer identification number (TIN) to entities paying them and are required to file an information return with an IRS report.

IRS W-9 Form 2024

The IRS W-9 Form helps to estimate the taxes owed by the contract worker in the tax year. The form assists in getting the taxpayer information, such as Taxpayer identification number (TIN) and certification, and reports the information to the IRS. 

The form is mostly used between businesses and independent contract workers to evaluate the taxes they owe. The W-9 Form generally requests in-tax information when the entity needs to report the following information:

  • Income paid to you
  • Cancellation of debt
  • Real Estate transactions
  • Contributions you made to the individual retirement arrangements (IRAs)
  • Mortgage interest you paid
  • Abandonment or acquisition of secured property 

The W-9 form has two parts – TIN and Certification. For individuals, TIN is their Social Security number, whereas for resident aliens, sole proprietors, or disregarded entities it is an Employment Identification Number.  The Certification confirms the information is correct with the payee’s signature. 

What is the purpose of IRS W-9 Form 2024?

The W-9 Form allows the individual or entity who needs to file an information return to the IRS to use the form to obtain the correct TIN to report on an information return the amount paid to you. For instance,  to create Form 1099 (interest earned or paid, dividends, non-employee compensation, home mortgage interest, stock or mutual fund sales or other transactions, etc.)

The W-9 Form serves its purpose and helps the entity to accurately report the information to the IRS, however, the information can’t be shared publicly. Filing the W-9 Form protects the company as by singing out the form, it signifies:

  • TIN or other identification number is valid and accurate
  • You are not subject to backup withholding, which refers to a situation where a person withholds the taxes from your paycheck to pay the taxes to the IRS.
  • You are claiming exemptions from backup withholding if you are a US citizen.
  • Your non-foreign status is certified for withholding purposes (if applicable)
  • You are exempted from the FATCA Code (if any).

So, the IRS W-9 not only serves businesses but also independent contract workers.  

Who uses the IRS W-9 Form?

When a business hires a freelancer or non-employee for a certain service or work, they need an independent contract worker to fill out the W-9 form, so that the entity can report the information to the IRS. 

The form is also used by the landlords to report their rental income as they request the renter to fill out the form. The vendors and suppliers of businesses may need to fill out the form for the entity to report their information to the IRS. According to the rules, when a company pays the independent contract worker more than $600 in a year, they must report the tax information to the IRS. 

The employee, or employer who withholds employee taxes, social security and Medicare taxes, and pays unemployment tax on the wages would need to fill out the IRS W-9 Form. The newly recruited employees may also be asked to fill out the W-4 form to provide their employer with their tax information. 

Penalties for not Filing the IRS W-9 Form

The individuals or entities who failed to fill the IRS W-9 form or did not fill it correctly will have to face the following consequences:

  • Penalty for incorrect TIN: If you fail to enter the correct TIN, you will be charged a cash penalty of $50 for each such failure.
  • Civil Penalty: The individuals who provide false information are subjected to withholding and can be charged with a penalty of $500.
  • Criminal penalty for wrong info: The individuals who willingly enter false information will be subjected to criminal penalties, which include fines or imprisonment. 
  • Misuse of TIN: If the requester misuses the TIN provided by the individual or entity and violates federal law, the requester will be subjected to civil and criminal penalties under federal law.

Instructions for IRS W-9 Form 

The individuals or entity must ensure the following information is filled in before they file the information through the IRS W-9 Form:

  • Line 1 should have the payee’s name or the business name, it should match the payee’s name in the tax returns.
  • Line 2: Business name if it differs from the above line.
  • Line 3: Next, is federal tax classification, such as individual. Sole proprietors, S Corporations, Partnerships, C Corporations, Trust/Estate, LIC and others.
  • Line 4: Exemption code when the payee is exempted from withholding the taxes (if any). It mostly applies to accounts maintained outside the US.
  •  Line 5-6: Payee’s Address 
  • Line 7: Account numbers 

After that the form has two parts, which we have discussed earlier, the candidates need to enter their TIN (SSN or EIN) and sign the form in Part II of the form. 

The business can download the form from the IRS’s official website and use the W-9 form to generate the Form 1099-MISC at the end of the year. However, the IRS always warns individuals and entities to be vigilant of their tax information to avoid any potential fraud or scam.   

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