Forms and Associated Taxes for Independent Contractors Internal Revenue Service
In that case, you may rely on the Form W-9 for purposes of obtaining the payee’s TIN, but you must treat the payee as non-exempt. W-9 forms are used in many different situations, often for independent contractors or freelancers. It’s important to fill out the form correctly as you may be subject to penalties if it is completed incorrectly; however, all of the information should be relatively easy for you to obtain. Be mindful of how you distribute the form to the requesting party, and take care of protecting your sensitive information and accurate tax reporting status.
The information provided on Form W-9 informs a company of what information to include in Form 1098 or Form 1099. The Filing Information Returns Electronically (FIRE) system is set up for financial institutions and others to file Information Return Forms 1042-S, 1098, 1099, 5498, 8027 or W-2G. Information Returns can be filed electronically, however, you must have software that can produce the file in the proper format as required by Publication 1220. Now, if you read the fine print in the W-9 instructions carefully, it seems to indicate that most people aren’t required to sign this form at all. You’re generally only required to sign it if the IRS has notified you that you previously provided an incorrect TIN. Technicalities aside, however, the person who asked you to fill out Form W-9 will probably consider it incomplete or invalid if you haven’t signed it.
Line 3 – Federal Tax Classification
That means you’ll be responsible for the employer’s share of Social Security and Medicare taxes, and you won’t be eligible for unemployment compensation if you are laid off. To report some of this related information to the IRS, independent contractors, freelancers, and other non-employees that received payments should fill out a Form W-9. Certain businesses and organizations are exempt from backup withholding in certain instances and will need to fill out this line.
- When you’re a full-time employee, your employer withholds some of your income to cover federal income taxes and FICA taxes (which include Medicare and Social Security taxes).
- The other boxes correspond to C corporation, S corporation, Partnership and Trust/estate businesses.
- You will need to fill out a W-4 when you’ve just started a new job as a full-time employee or your financial situation has changed (while still remaining a full-time employee).
- A Form 1042-S is required even if the tax was not actually withheld.
- The purpose of a Form W-9 extends beyond just this single situation.
- However, the following payments made to a corporation and reportable on Form 1099-MISC, Miscellaneous Information, are not exempt from backup withholding.
You will need to fill out a W-4 when you’ve just started a new job as a full-time employee or your financial situation has changed (while still remaining a full-time employee). A W-4 form requires some of the same information as fedex w9 a W-9, like your name, address and Social Security number. This is an optional line where you can fill in any account numbers your employer may need. The form itself isn’t even an entire page long, excluding the instructions.
Filing Electronically With FIRE
When you begin working with a contractor or freelancer that you will be paying, you should request that the contractor complete a Form W-9 prior to starting any engagement. Failing to do so could prove troublesome after beginning the work. Yes, a W-9 is most often used for individuals who are self-employed. If a worker is an independent contractor, freelancer, or self-employed, Form W-9 must be provided to those whom you have earned over $600 from without having been hired as an official employee. If someone asks for a completed Form W-9, it’s usually for a good cause.
