Internal Revenue Service (IRS) Form W-9 identifies the name, address, and taxpayer identification number of each vendor or independent contractor who provides a business with goods or services.
Form W-9 is used by businesses to get tax information from external parties. The information provided on Form W-9 informs the company of what information to include in the Form 1098 or 1099.
Purpose of W-9 is to gather tax information from vendor. When company pays a non-employee or other entity money more than $600 in a year for their service, the company must file it.
Independent contracts, vendors, freelancers, gig employees and other non-employees that received payments should fill out a Form W-9.
The information obtained on W-9 form is most often used to create a version of Form 1099. A taxpayer may also be asked to furnish a W-9 for cancel debt, student loans or real estate transactions.
Form W-9 can be downloaded from the IRS website, or your contractors can complete the form interactively online then print it out and give it to you when it's completed.
If you don't furnish W-9, your client must withhold taxes from your earnings at a tax rate of 24%. If taxpayer fails to furnish a correct tax number, is subject to a $50 file for every instance.