Why Does a Business Ask a Taxpayer to Complete a W-9 Form?
A business requests a taxpayer to complete a W-9 form to obtain the taxpayer’s tax ID or Social Security number and personal information including name and address, notes Investopedia. It is advisable for the taxpayer to complete this form only after ascertaining it is appropriate for the situation.
The W-9 form is used by businesses that hire independent contractors or freelancers, according to Investopedia. This is because businesses may not deduct income taxes, Medicare or Social Security taxes from the freelancer’s pay but may have an obligation to submit a tax report to the Internal Revenue Service, or IRS, to ensure the freelancer is responsible for paying any necessary income taxes. As a result, a business uses the form to solicit information from the independent contractor. Thus, the business has the information when completing form 1099-MISC, which is submitted to the IRS.
To ascertain whether it is appropriate to fill out the W-9 form, the taxpayer should conduct research upon receipt of the form before attempting to complete it, explains Investopedia. This is because the form is not suitable for every taxpayer. For instance, taxpayers who are under employment are not supposed to complete the W-9 form because employers withhold their income taxes.