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You're probably familiar with many tax forms, from the 1040 to the W-2 to the 1099. Not everyone, though, has encountered the W9. But knowing a bit about this form could improve your financial life.
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The basicsThe W9 form -- Request for Taxpayer Identification Number and Certification -- is an IRS form, but not one you send to the IRS. Instead, you typically get one from a business that will be paying you, and its purpose is to record your tax identification number, along with your name and address. That's so the business can later fill out paperwork for the IRS, such as a 1099 form, reporting how much it has paid you. The number is necessary to ensure the IRS can identify you and connect the reported income with the correct person or business.
For W9 form purposes, your tax identification number is generally your Social Security number, or SSN. If you run a sole proprietorship, it could be your Social Security number or your Employer Identification Number, or EIN, though the SSN is preferred. If your business is a single-member limited liability company, or LLC, the Social Security number is generally the right number to use; but if your business is a partnership or multimember LLC, you should use the EIN. (For many more details, check out the W9 form itself and its accompanying instructions.)
Guard your Social Security number. Image: DonkeyHotey, Flickr.
More to knowHere are a few more things to know about the W9 form:
- It's generally required for freelancers, consultants, contractors, and other self-employed folks -- people who perform work for a company without being employees. In an employer/employee relationship, the new employee will generally be asked to submit a W-4form, which provides their name, address, Social Security Number, and information to help the employer determine how much tax to withhold from paychecks.If a company hires you as en employee but asks you to submit a W9 form, you might want to confirm you're not classified as an independent contractor.
- Certain financial institutions that pay you dividends, interest, or some other kind of income might require a W9 form, but that's often unnecessary, as they should have obtained your Social Security number and address when you opened your account. Be sure any request for a W9 form is legitimate, lest you share your SSN with an unscrupulous party interested in identity theft.
- Along the same lines, don't leave the form lying around or send it to the company in an unsecured way, such as in an unencrypted email attachment or in a fax that might sit for some time before being collected by the intended recipient. Remember that the information on the form is a gold mine for an identity thief.
- If you change your name, your business's name, your tax identification number, or your address, you should submit new W9 forms to the businesses that pay you.
The tax code is roughly 4 million words long. You don't need to learn and understand it all, but knowing about the W9 form can serve you well.
The article What Is a W9? originally appeared on Fool.com.
Longtime Fool specialistSelena Maranjian, whom you can follow on Twitter,has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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