As we all know, tax season can be a stressful time. However, it’s important to stay on top of all necessary paperwork to ensure that our taxes are filed accurately and efficiently. One important form that contractors may need to fill out is the W-9 form, and luckily there is a new version available for 2021. Here, we’ll walk you through the process of filling out the W-9 form and everything else you need to know as a contractor.
What is the W-9 form?
The W-9 form is used by businesses or individuals who hire independent contractors to report income paid to contractors for tax purposes. The form is used to request the contractor’s taxpayer identification number (TIN) and other identifying information. The information collected on the W-9 form is used to generate and file a 1099-MISC form, which reports the total amount paid to the contractor during the tax year.
As an independent contractor, you’ll need to fill out a W-9 form for each client or business that hires you. This form is not required by law, but failure to provide one can result in the withholding of 24% of your income for taxes, so it’s important that you fill one out.
How to fill out the W-9 form
The W-9 form is a simple one-page document with fields for your personal information. Here’s what you need to do to fill it out correctly:
- In the “Name” field, enter your legal name as it appears on your IRS records.
- In the “Business name” field, enter your business name if you have one. If you don’t have a business name, you can leave this blank.
- In the “Address” field, enter your mailing address.
- In the “City, state, and ZIP” field, enter your city, state, and ZIP code.
- In the “Taxpayer Identification Number” field, enter your Social Security number (SSN) or individual taxpayer identification number (ITIN). If you don’t have an ITIN, you can apply for one using Form W-7.
- In the “Exemptions” field, indicate any exemptions you qualify for by checking the appropriate box(es).
- Sign and date the form.
It’s important to note that if the information you provide on your W-9 form is incorrect, your client may withhold taxes from your income to avoid penalties. So make sure to double-check everything before submitting your form.
What is a 1099-MISC form?
The 1099-MISC form is used to report income paid to non-employees such as independent contractors, freelancers, and other self-employed individuals. This form is generated by the business or individual who hires the contractor and filed with the IRS by January 31st of the following year. The contractor also receives a copy of the form for their tax records.
The 1099-MISC form includes the total amount paid to the contractor during the tax year, as well as any federal and state taxes withheld. The contractor is responsible for reporting this income on their personal tax return and paying any taxes owed.
What are the deadlines for filing the W-9 and 1099-MISC forms?
The deadline to provide a completed W-9 form to a client is typically before the contractor begins any work. However, if a client hires you without requesting a W-9 form, it’s your responsibility to provide one as soon as possible.
The deadline to file the 1099-MISC form with the IRS is January 31st of the following year. It’s important to keep track of all income received from clients throughout the year so you can accurately report it on your personal tax return.
Conclusion
As a contractor, it’s important to stay organized and on top of all necessary tax paperwork. The W-9 form is just one piece of the puzzle, but it’s an important one that will help ensure that you’re paid accurately and in compliance with tax laws. By following these simple steps, you can easily fill out and submit your W-9 form for 2021. Good luck!
