They should also have concerns if they receive a W-9 form from a company for whom they are supposed to be working as a regular employee; the company may be trying to defraud them of benefits they are entitled to by counting them as an independent contractor.
If an LLC operates as an independent contractor for other companies, then it too must complete a W-9 form. To do so, the following special considerations should be taken for the form:. UpCounsel accepts only the top 5 percent of lawyers. Most individuals can leave this blank. You have two options in this section. If you are a sole proprietor, you could use either number, but your SSN is preferable. Again, you may want to check with your tax advisor or contact the IRS directly to double check your information.
Providing an incorrect TIN can cause issues with your payments or tax return. It can also lead to future backup withholding. This is where you sign and date the form, indicating that you provided your accurate information. Again, keep your safety in mind when completing and sending a W Before you even fill it out, verify that the request for your form is legitimate.
Also make sure to send the completed form properly. Use a secure method of delivery, like hand delivery, mail or encrypted file attachment. A W-4 form requires some of the same information as a W-9, like your name, address and Social Security number. These forms also request information on tax exemptions.
Employers use the completed W-4 to determine how much to withhold from your paycheck for federal income taxes. Remember that the only reason anyone would ever need a W-9 from you is because they need it to send you some kind of IRS form. The appropriate form for them is form W Your client, bank or other financial institution have to send you a W-9 themselves if they need you to fill one out. W-9 is a one page form from the IRS. It also comes with five pages of instructions.
The part that you have to fill out looks like this:. When someone wants you to send them a W-9, this is what they want from you: either a social security number SSN or an employer identification number EIN.
If your business has any employees or operates as a corporation or partnership, it probably needs an EIN to do business and file with the IRS properly. It can be a little confusing to differentiate whether you should fill out Form W-9 or Form W-4 based on the actual work performed. A better gauge is the circumstances around the working relationship. Generally, the more control an employer exerts over what a worker does and how they do it, the more likely that person is an employee and not an independent contractor.
Another quick way to tell is to determine whether the business aspects of the relationship are controlled by the payer. That includes how the worker is paid, whether expenses are reimbursed, which party provides tools, supplies, etc. If the employer controls those details, the worker is more likely an employee. If employee benefits are offered, like pension plans, paid vacation, and matching k contributions, the worker is probably an employee.
Sometimes an employer might try to save money by classifying an employee as an independent contractor. Here are a few things to look out for:. Take Control of Your Finances Sign up to get the latest tax tips, information on personal finance and other key resources sent straight to your email.
What is a W- 9 tax form?
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