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The US tax authority body, the Internal Revenue Services (IRS), has different tax classification brackets. Additionally, as long as you offer your services to a business or any other type of entity and are paid $600 or more in any given financial year, they will require you to fill out an IRS form W9. Contractors, whether independent or subcontractors will always be requested to fill out the contractor tax form W9. The contractor tax form W9 is a simple form that can be downloaded from the IRS website. The form requires you to issue your requester with your taxpayer identification number, address and your tax classification. The form isn’t what’s issued to the IRS. Instead, your temporary employer, will use the information on the contractor tax form W9 issued to them by you to file your tax returns on the IRS form 1099-MISC.
As a contractor, you will need two types of the IRS form, the contractor tax from W9, which is filled by you and the 1099-MISC form that’s filled by the entity that has hired you. Both the forms will only be filled in the event that you will earn $600 or more in any financial year. Contractors who then earn less than $600 will not be required to fill out and submit any forms. Additionally, it’s important to not misclassify your employee as a contractor and vice versa. In the event that a company or organizations misclassifies an employee or contractor, there will be hefty penalties involved. As a contractor, once you have issued the contractor tax form W9, the business that made the request for the W9 from is then required by law to issue you with one copy of the form 1099-MISC and the other to the IRS after each financial year.
The contractor tax form W9 will require your taxpayer identification number. The taxpayer identification number can either be your Social Security Number (SSN) or your Employer Identification Number (EIN). Both numbers are usually issued out by the IRS except for the Social Security Number that can be issued out by the Social Security Administration (SSA). As a contractors, once you have issued out the contractor tax form W9; the employer has filed your tax information on the IRS form 1099-MISC and given you a copy; you will then use the information on form 1099-MISC to file your tax returns. This is to ensure you are in compliance with the law and are filing and keeping records of your income. Also, both you the contractor and your employer are required to keep the copies of the IRS form 1099-MISC for at least four years just in case at some point the IRS needs them for auditing.
When a business or any other entity requests that you provide them with your contractor tax form W9, you need to be cautious. Make sure that you know the person or business asking for your information. This is in a bid to stay safe and prevent identity theft. Also make sure that all information given on the form is correct and matches the details the IRS has i.e. your taxpayer identification number. On the business type, if you are a single business type limited liability company, you will need to file your returns as a sole proprietor. If your business has several members, you will then need to file your tax returns as a partnership. It is important to ensure all information given is correct as any incorrect information could lead to you facing criminal charges. Make sure that you are inform the business, whether you are subject to backup withholding and then securely send your contractor tax form W9.