The purpose of Form W-9 2018:
Form W-9 is an Internal Revenue Service (IRS) tax form used for collecting the taxpayer identification number (TIN) from individuals or businesses who are being paid certain types of income. It is primarily used by businesses or entities that are required to report taxable income, such as employers, financial institutions, government agencies, and freelance workers.
The main purpose of Form W-9 is to provide the payee's TIN to the payer, ensuring accurate reporting of income to the IRS. The TIN can be an individual's Social Security Number (SSN) or an Employer Identification Number (EIN) for businesses. By completing this form, the payee certifies under penalties of perjury that the TIN provided is correct and that they are not subject to backup withholding.
Form W-9 is commonly used when individuals or businesses are hired as independent contractors, freelancers, or consultants, as well as by financial institutions that generate interest, dividends, or other reportable income. The information collected on Form W-9 is crucial for accurately reporting income on various tax forms, including Form 1099-MISC, which is used to report miscellaneous income paid to non-employees.
It is important for both payers and payees to understand the significance of Form W-9. Payers rely on the TIN provided by the payee to complete their reporting obligations, helping them fulfill their tax responsibilities. Payees must provide accurate information on this form to prevent underreporting of income or potential penalties from the IRS.
Overall, the purpose of Form W-9 is to facilitate the accurate reporting of income and help maintain compliance with tax laws. It serves as a crucial document for both payers and payees in ensuring the proper identification and reporting of taxable income. It is recommended that individuals or businesses consult a tax professional or the IRS website for specific instructions on how to complete and submit Form W-9.