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If you are hired as a contractor or freelancer for a business, they may request that you fill out a form W-9.
This tax form collects information from you, independent contractor or freelancer, for the business that will be making payments to you. Since an independent contractor or freelancer is not a full time employee, form W-9 allows the business who is making the payments to record transactions to be later reported to the IRS. Not only will the payments be reported to the IRS, they will also be reported back to the independent contractor or freelancer using form 1099-NEC. This is a great way to keep accurate records of payments received.
Generally speaking, if you are doing work with a company (and you’re aren’t a full or part- time employee) and expect to be paid more than $600 by that particular client by the end of the year then you will need to complete a W-9. You can find the form here. Here is a step by step guide on how to complete it:
After you have completed these boxes, you will move down to Part I and Part II of the form.
There are some common mistakes that people make when filling out tax forms. You should always double check for errors before submitting a tax form.
It is the responsibility of the business to request a W-9 form from independent contractors and freelancers. You should still ensure that you request one and complete it for accurate tax reporting purposes. If you refuse to complete a form W-9 once a business has requested you to do so, you may be subject to backup withholding of 24%.
As a final note, as an independent contractor or freelancer, you will want to ensure that all businesses that you do work for are legitimate. Providing personal information is sensitive, so you will want to verify that the business is legitimate before providing any personal information. Check out our blog post on tax saving strategies for 2022.
Need some support with your wealth journey as an independent contractor or freelancer? Schedule a free intro call with our money coach Anna, where we’ll share how the membership works and give you an opportunity to ask questions.