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IRS Form W9 (2024)

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IRS Form W9 (2024)
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Updated February 05, 2024

An IRS form W-9, or “Request for Taxpayer Identification Number and Certification,” is a document used to obtain the legal name and tax identification number (TIN) of an individual or business entity. It is commonly required when making a payment and withholding taxes are not being deducted.

How it Works (5 steps)

  1. Hire. Hire a non-employee to perform services.
  2. Request W-9. Request a W-9 to be completed by the non-employee.
  3. Pay. After receiving a completed and signed W-9, payment is made.
  4. $600 limit. If paid $600 or more per tax year, prepare 1099-NEC.
  5. IRS Filing. File 1099-NEC with the IRS and send a copy to the non-employee before Jan 31.

Table of Contents

When is a W-9 Required?

A W-9 must be collected if payment is being made and withholding taxes are not being deducted. Under IRS law,[2] an employer making payments for wages is responsible for collecting withholdings from employees.

After completion and signing, a W-9 requires a payment recipient to be responsible for the tax liability incurred when accepting a payment.

w9 requirements

W-9 Common Uses

  • Independent Contractors: Businesses hiring freelancers or vendors may request a W-9 to obtain the TIN or SSN to report payments to the IRS using a 1099-NEC.
  • Banking: A W-9 may be required by financial institutions to report income paid via capital gains, dividends, or interest. A 1099-DIV is normally submitted to the IRS.
  • Rental Income: If you have a property management company for your rental, the company will request a W-9 to record payments made, later reported on a 1099-MISC.
  • Real Estate Transactions: In the sale of a property, a W-9 for the buyer/seller may be requested to report transactions like the sale proceeds to the IRS via a 1099-S.
  • Legal Settlements: If you receive money for a legal settlement, the payor may need to request a W-9 for tax reporting purposes, likely on a 1099-MISC.

When a W-9 is NOT Required

  • Employees: Employee-employer relationships require information about tax withholding that is completed through a Form W-4.
  • Personal Payments: Payments to friends or reimbursing someone for personal services do not usually require reporting of payments.[3]
  • Tax-Exempt Organizations: Payments made to charities or qualified nonprofits typically do not require a W-9.[4]
  • Under IRS Threshold: The IRS reporting threshold is different in some areas. Most commonly, businesses paying for services do not need to collect a W-9 or report income under $600.[5]

How to Fill Out a W-9 (3 parts)

  • Download: PDF

Part 1 – Identifying Information

Line 1. Name (as shown on your income tax return)
Line 2. Business name/Disregarded entity name (if different from line 1)
Line 3. Choose tax classification.

    • Individual/sole proprietor/single-member LLC
    • C Corporation
    • S Corporation
    • Partnership
    • Trust/estate
    • Limited liability company (LLC) and choose how it is taxed:
      • C=C corporation
      • S=S corporation
      • P=Partnership
    • Other

Line 5. Street Address (only)
Line 6. City, State, and Zip Code

Part 2 – Taxpayer Identification Number (TIN)

Enter a social security number (SSN) or employer identification number (EIN).

Part 3 – Certification

A valid signature and date must be applied for the form to be legally valid. The date should be marked as the day the form is provided to the requestor.

Frequently Asked Questions (6)

  1. What is the penalty for not collecting a W-9?
  2. Can a W-9 be signed electronically?
  3. What happens if a contractor refuses to provide a W-9?
  4. What if a W-9 is incorrect?
  5. Does the IRS update Form W-9 each year?
  6. What happens if a W-9 is NOT collected?

1. What is the penalty for not collecting a W-9?

A fine of $50 is levied on those who fail to comply with the specified information reporting requirement and collect a W-9.[6]

2. Can a W-9 be signed electronically?

The form may be signed, dated, and sent electronically and does not require a wet signature.[7]

3. What happens if a contractor refuses to provide a W-9?

Refusing to provide a W-9 creates compliance issues and must be handled by either:

  • Backup Withholding: Invalid TINs or refusal to provide a W9 require the payor to initiate backup withholding, whereby 24% of the contractor’s payment is withheld and paid to the IRS by the payor.[8]
  • Termination: The payor may terminate or suspend the vendor’s or independent contractor’s services.

4. What if a W-9 is incorrect?

If a W-9 provided by a payee has deliberately false information, such as a false TIN, the payee could face the penalty of perjury.[9] If a submitted W-9 has a name discrepancy or any other error, it should be resubmitted to the payor.

5. Does the IRS update Form W-9 each year?

The IRS’s most updated revision of the W-9 form was in October 2018. This form is the current version used for all succeeding tax years.

6. What happens if a W-9 is NOT collected?

If a W-9 is not collected, and transactional information is not reported to the IRS, penalties may apply.[10]

What is a W-9? (Video)

Sources

  1. www.irs.gov/businesses/small-businesses-self-employed/forms-and-associated-taxes-for-independent-contractors
  2. 26 U.S. Code § 3402(a)(1)
  3. https://www.taxpayeradvocate.irs.gov/news/tas-tax-tip-use-caution-when-paying-or-receiving-payments-from-friends-or-family-members-using-cash-payment-apps/
  4. https://www.irs.gov/pub/irs-pdf/iw9.pdf
  5. https://www.irs.gov/businesses/small-businesses-self-employed/reporting-payments-to-independent-contractors
  6. 26 U.S. Code § 6723
  7. https://www.irs.gov/pub/irs-drop/a-98-27.pdf
  8. https://www.irs.gov/businesses/small-businesses-self-employed/backup-withholding
  9. https://www.irs.gov/pub/irs-pdf/p1586.pdf
  10. https://www.irs.gov/payments/information-return-penalties