As a business owner or accountant, you understand how important TIN checking is, but how do you get TINs in the first place?
What is Form W-9?
To request a TIN from an employee, freelancer, or contractor, you can use Form W-9.
According to the IRS:
Use Form W-9 to provide your correct Taxpayer Identification Number (TIN) to the person who is required to file an information return with the IRS to report, for example:
- Income paid to you.
- Real estate transactions.
- Mortgage interest you paid.
- Acquisition or abandonment of secured property.
- Cancellation of debt.
- Contributions you made to an IRA.
Why is Form W-9 Important?
If you pay full-time employees, you likely have procedures established where you collect their personal information, including their TIN. But what about your freelancers and contractors?
It’s important to have a procedure for collecting their TINs, too. Form W-9 makes this easier.
Mark J. Kohler explains the importance of Form W-9 well:
The W-9 is your “best friend.” Some of you may be frustrated that you don’t have the information you NEED to issue Form 1099. One of the smartest procedures a business owner can implement is to request a W-9 from any vendor you expect to pay more than $600 before you pay them. Using this as a normal business practice will give you the vendor’s mailing information, Tax ID number, and also require them to indicate if they are a corporation or not (saving you the headache of sending them a 1099 next year).
Having a contractor’s W-9 on file before tax season will make filing 1099s much easier.
What to Do if You Receive a W-9
If you receive a W-9 from a company or person, it’s important that you complete the form accurately and return it to the company that sent it to you.
That company or individual will likely keep that form on file to reference during their end-of-the-year accounting, so be prepared to receive a Form 1099-NEC or similar form from them next January.
Are you preparing for the next tax season? Are you filing late? Sign up for a free eFile360 account to file 1099s. Your information will be securely saved year after year for easy reference.