A W-9 form is often confused with other commonly-used tax documents, like a W-4 and W-2. However, you may need to submit a W-9 tax form to entities so they can give you the corresponding paperwork to file taxes.
Although the Internal Revenue Service (IRS) creates and updates the W-9 form, you don’t need to submit it to the government agency. The W-9 form is different from other tax documents. Find out more about when you may need to complete one and how to submit it.
What is the IRS W-9 Tax Form Used For?
The W-9 form exchanges tax-related information between two entities. You usually need to fill out some tax paperwork when you earn an income or want to reduce your tax responsibility. Below are factors that could influence the tax documents you need to complete:
- The amount of money you earn
- Your sources of income
- Your employment status
Self-employed individuals and independent contractors usually fill out an IRS W-9 form when they work for a business or have a client, since payers are not responsible for withholding taxes on behalf of contractors. These workers are usually liable for filing and paying their taxes.
You confirm your tax information when you fill out and sign W-9 online or in person, including if you are subject to backup withholding. Backup withholding is a specific percentage of your pay that payers send to the IRS on your behalf.
A financial institution may also request you fill out W-9 electronically or by paper for certain accounts, such as an interest-accumulating bank account or brokerage account. For instance, you may receive taxable retirement distributions, dividends, or capital gains (such as from selling your home).
Summary: You may need to complete a blank W-9 if you are self-employed, earn money from investment accounts, or deal in financial transactions that influence your tax responsibility. A W-9 is the form you submit to others so they can send you tax documents to send to the IRS.
How a W-9 Form Can Influence Your Taxes
A W-9 form can affect your taxes if you are self-employed or have certain financial transactions. When you fill out and sign W-9 online or in person, you should complete it as accurately as possible. The W-9 form requires information about your federal tax classification and taxpayer identification number (TIN).
The government considers earned interest and other money as income, which is often taxable. However, you can also reduce your taxable income. For instance, you may be able to deduct the interest you pay from your gross earnings.
Taxable Employment Income
Most people work for employers, so they fill out a W-4 when hired and specify their filing status (single, head of household, etc.), dependents, and other adjustments. Their employer withholds some of their pay to cover their taxes. Then, employees receive a W-2 at the end of the tax year that details how much they earned and the taxes withheld on their behalf.
But a W-4 and W-2 may not apply if you are self-employed. You may receive a blank W-9 from a client before getting paid or from a financial institution when you set up an account. After the tax year, entities that paid you more than a certain amount typically send you tax documents, such as the following:
- 1099-MISC for miscellaneous income, such as freelance work
- 1099-G for some government payments, like unemployment insurance
- 1099-R for distributions from retirement funds like pensions
- 1099-DIV for dividends and capital gains from investments and sales
- 1099-INT for interest earned from banks, brokerages, and other accounts
- 1099-B for stocks and other brokerage transactions
- 1099-S for real estate proceeds
In most cases, you pay estimated taxes quarterly if you are self-employed since an employer does not deduct your federal or state tax obligation. Self-employment (SE) tax is higher than the amount employees pay, since an employer is not covering half.
The SE tax rates for 2021 are 12.4% for Social Security and 2.9% for Medicare. However, you may also deduct the portion an employer would pay from your gross income.
Deductions From Other Finances
Likewise, you can send W-9 securely to a financial institution to reduce your tax responsibility. For example, you can deduct home and student loan interest payments by sending the IRS certain forms.
You may need to complete a W-9 form to receive the following tax documents:
- 1098-E for student loan interest statement
- 1098-T for student tuition and other education expenses
- 1098 for mortgage interest
- 5498 for contributions to a traditional IRA
Summary: By submitting a W-9 form, other entities send you documents that affect how much money in taxes you may owe. Most 1099 forms show taxable money you received, while 1098 forms can reduce your gross income.
How to Submit W-9 Forms
IRS W-9 forms require sensitive information, specifically your taxpayer identification number (TIN). In most cases, your TIN is your Social Security number (SSN). If you have a small business, you may have applied for an employer identification number.
Standard mail has a higher risk of identity theft exposure. Someone can illegally take mail out of your mailbox or pick it up if the mail carrier drops it.
Since 1998, the IRS has permitted people to sign W-9 electronically and send it securely to other entities. You can encrypt emails so only you and the recipients can view the documents.
Here are the general steps to complete a W-9 form online:
- Download the document to your computer.
- Click on the line where you want to type.
- Make sure you spell names and write numbers correctly.
- Add your electronic signature.
Third-party providers have electronic services so you can fill out a blank W-9 on your computer or smartphone. However, before you go with any company with W-9 electronic signature free services, ensure they are reputable. If you do not want to sign W-9 online, you can download the form to print and complete it by hand.