What is a W9?

A W9 form, officially called the “Request for Taxpayer Identification Number and Certification,” is used by U.S. companies to gather information from independent contractors, freelancers, and other third-party service providers. The W9 form is essential for businesses because it helps ensure they have accurate taxpayer information to comply with IRS regulations for reporting income. The W9 form provides the contractor’s Social Security Number (SSN) or Employer Identification Number (EIN), which the business uses to report payments made to contractors, contributing to accurate tax reporting for both parties.

Independent contractors, freelancers, and other non-employee service providers working in the U.S. are typically asked to fill out a W9 form. This includes anyone the business pays more than $600 annually who isn’t classified as a W2 employee. As independent contractors, they are responsible for reporting their earnings to the IRS, and the W9 form is a crucial step in that process. For more information on the classification of independent contractors, visit our independent contractor resource page.

While the W9 is used by U.S. individuals and entities to provide their taxpayer identification information, the W8 form series is specifically for foreign individuals and businesses receiving income from U.S. sources. The W8 form helps determine if the income is subject to U.S. withholding tax, while the W9 is strictly for U.S. taxpayers. For more on W8 forms, see our W8 resource page.

Yes, businesses are required to protect the information provided on a W9 form. It contains sensitive information like SSNs and EINs, so companies typically use secure storage and encryption to prevent unauthorized access. Proper data protection measures help ensure that this critical taxpayer information remains confidential, minimizing the risk of identity theft.

Visa holders in the U.S. may need to fill out a W9 if they qualify as U.S. residents for tax purposes and are providing services as independent contractors. This includes visa holders like those with an E2 visa, who are authorized to work in the U.S. If you’re a visa holder and have questions about eligibility, it’s essential to consult a tax advisor or the IRS. For more on specific visas like the E2, visit our E2 visa page.

Businesses use the information on a W9 form to prepare IRS Form 1099-NEC, which reports payments to independent contractors. The 1099-NEC form summarizes income paid to contractors who provided services throughout the year. The IRS requires this form to ensure proper tax compliance by both the contractor and the business. By issuing a 1099-NEC, businesses help contractors accurately report their income and fulfill their tax obligations.

If a contractor refuses to provide a W9 form, the business might withhold a portion of their payment for taxes. This is known as “backup withholding,” where businesses are required to withhold a flat 24% for federal taxes from any payments. Contractors should consider the potential impact of refusing to submit a W9 and work with businesses to complete their tax documentation properly.

The W9 form is a core component of contractor management for U.S. businesses. By collecting accurate taxpayer information upfront, companies can streamline their compliance processes and avoid penalties for improper tax reporting. Businesses working with contractors should have a reliable contractor management system in place to ensure all documentation is complete and secure. This not only supports financial accuracy but also helps businesses maintain a positive working relationship with their contractors.

No, W9 forms are only intended for independent contractors and other non-employees. Employees should fill out a W4 form instead, which includes additional information for income tax withholding. Incorrect use of a W9 for employees could lead to tax complications for both the business and the individual.

If a company uses an Employer of Record (EOR) service like Safeguard Global, the EOR takes on responsibility for managing compliance and employment details, including documentation. An EOR can manage independent contractor paperwork or employee tax forms, relieving companies of administrative burdens and ensuring compliance with tax and employment laws. Using an EOR platform offers an effective way to manage global recruitment needs, tax forms, and contractor agreements, allowing businesses to focus on growth and strategy.