What Is W-9 Form and How to Fill It Correctly?

What Is W-9 Form and How to Fill It Correctly?

by | Mar 26, 2022 | W-7 Form

With the tax season in full swing, people are scrambling to file their tax returns by April 18th in the US. If you are reading this, then the chances are that you, too, are looking to do your taxes, specifically your W-9. For instance, if you’re an Indian residing in the US as a resident alien for tax purposes, you’re liable to file your income taxes, even if you’re a freelancer. This piece aims to dissect the W-9 form to its core to help you understand how to fill out W-9 for individuals. 

Are you busy? Or missed the deadline? Fret not, check out this article on how to file for a tax extension.

What Is a W-9 Form?

What-Is-a-W-9-Form

The W-9 is an official request form for the taxpayer’s Taxpayer Identification Number (TIN) and certification by the employer. The W-9 also records personally-identifying information such as your name, address, and account numbers.

Essentially, the form functions as a contract that you, as a contractor or freelancer, take responsibility for withholding taxes from your income generated with the business. 

While a full-time employee doesn’t need to worry about this form as their employer deducts income and FICA taxes right out of their paycheck, it isn’t the case with freelancers.

Tax forms are vital to you and the government; check out this article to avoid making mistakes on your tax forms.

The W-9 Form is for Whom?

Who-Is-the-W-9-Form-For

You must fill out the W9 form with your employer if you have made over $600 in that financial year without being hired as a full-time employee. 

When you begin working for a business as a freelancer or contractor, you will be issued a W-9 form by the enterprise to report your earnings. 

While you still need to record your income directly to the IRS, the W-9 form serves as a secondary reporting source done through the business that employs you. 

Unlike the W-4 form, W-9 is intended solely for contract workers, freelancers, and self-employed individuals working in the US.

Your employer exclusively uses the details you fill out on your W-9 form to complete a 1099-MISC form to file with the tax authorities by the end of the financial year. This form outlines all the payments made by the company to you as a contractor/freelancer. 

Financial institutions sometimes also require you to report capital gains, dividends, interest earned. Hence, as a part of the onboarding procedure, most companies or financial intuitions will send out a W-9 form when you are employed. If you aren’t sent one, you can download a W-9 form straight from the IRS website.

How to Fill Out W-9 for Individuals?

Okay, here we get to the crucial part: how to fill out W-9 for Individuals?  Filling out the form is pretty straightforward; however, you have to be careful as it’s easy to mess up. 

The six-paged form is pretty short if you exclude all the instructions. Your employer will partially fill out the form, leaving only half of it for you to fill. 

Your employer fills out their registered name and your designated Employee Identification Number (EIN), and the rest is all yours.

Download the W-9 form (PDF) 

Below is a breakdown of all the crucial sections of the W-9 form that you, as an independent contractor/freelance, must fill: 

Name

Write down your full name matching your official documents, preferably in block letters.

Business name

You can use this field if you have a business name, disregarded entity name, or a DBA; you can also leave this blank if you wish to do so.

Federal tax classification

Here, you can see seven different categories. 

For example, you can check the first box if you are an individual or a sole proprietor of a limited liability company (LLC). 

A sole owner business works under the proprietor’s social security number and won’t come under any other type of business. Therefore, taxes too apply to single-member LLCs in the same format. 

Next would be the C-corporation, S-corporation, Partnership, and Trust/estate businesses. 

You can check these boxes if you belong to any corporations, partnerships, or trustees professionally. 

Finally, we get to the Limited Liability Company box. This box is meant only for those part of Partnerships or LLC businesses with multiple members. 

Exemptions

Unless you are part of a business or an entity tax exemptions, you won’t need to fill this field. 

However, if you are a part of a business or entity, you’ll need to provide a designated code that offers the authentication.

Most businesses are exempt from backup withholding and will fill out a code. 

However, in a rare case where your employer is not, they will have to deduct a flat 24% off as income tax from your paycheck.

If you are an individual who has an account outside the USA, you may be exempted under the Foreign Account Tax Compliance Act (FACTA); refer to page 3 of the form to check if you qualify; else, leave it blank.

Address, city, state, and ZIP code

You can utilize this field to fill up your current address. Ensure that you fill-up the same address where your employer mails you for communication.

Account number(s)

You can choose to share an account number; it is optional.

Taxpayer identification number (TIN)

Here you have two options; you can identify yourself with your state-issued social security number (SSN) or TIN. If you are a resident alien, you can also use your Individual Taxpayer Identification Number (ITIN) issued by the IRS.

Certification

Okay, now we get to the final step of the process. 

Here, you sign and date the form verifying that the information provided is authentic and consensual. Then, ensure that you go through all the fields once again for the final time and sign the document.

Summing Up

Whether you are a contract worker, freelancer, or even self-employed, a W-9 form is vital for staying tax-compliant with the IRS. The W-9 serves you as an agreement to allow you the freedom to do your taxes. 

Unlike a W-4 or 1099, you don’t need to send the W-9 form to the IRS; rather, you send it to your employer. Ensure you double-check all the details before signing and sending it. 

And finally, always make sure you send it through secure channels and to certified professionals to prevent any misuse of your data.

While you are here, check out our article on bookkeeping secrets here.

How AOTAX Can Help you Get Through the Tax Season

At AOTAX, we strive to make tax-filing hassle-free. Here’re some ways we can make filing your tax a breeze: 

  • If you are someone who requires support staying organized, you may benefit from AOTAX’s seamless 100% Online Process. 
  • Our financial advisors are available 24*7 to provide you with high-quality services. 
  • Better yet, you can get a free tax draft within 24 hrs before choosing to file with us.
  • If you are a freelancer or a contract worker and get paid more than $600 a year, ensure that you get 1099 before the 31 of January to avoid issues.
  • If you have a tough time tracking all your taxes, you can also opt for a tax filing software like TurboTax to keep up.

With that, we conclude this article on W-9s and how to fill out W-9s for individuals. We hope that this article clarifies what W-9 is, how it functions, and helps you fill up your W-9 in the future. 

What is the process to obtain the US Individual Taxpayer Identification Numbers (ITINs)?

What is the process to obtain the US Individual Taxpayer Identification Numbers (ITINs)?

by | Jan 31, 2020 | federal income tax, IRS, ITIN, SSN, tax filing, Tax Payers, tax return, taxes, W-7 Form

What is the process to obtain the US Individual Taxpayer Identification Numbers (ITINs)?

US Individual Taxpayer Identification Number is an Identification Number which is used by the IRS (Internal Revenue Service) for the administration required in the field of tax laws. ITIN is a nine-digit number that is issued either by the SSA (Social Security Administration) or by the IRS. ITIN is issued by IRS to those individuals who must have a US taxpayer identification number but do not qualify to obtain SSN (Social Security Number)from the SSA.

Why do you need ITIN?

When you are working in the US and earning in the US, but you do not qualify to obtain an SSN, then the ITIN will be helpful during your filing for tax returns.

Let us find out what does an ITIN does.

  1. If you qualify to obtain a tax refund from the IRS, then ITIN will help you in obtaining a refund.
  2. ITIN will help you to file your taxes and help the qualifying dependents to claim the tax benefits.
  3. Moreover, ITIN can help you to apply for a mortgage loan or open a bank account.

Eligibility for obtaining ITIN

 You should be falling into these below-mentioned categories to obtain the ITIN.

  1. You should be a non-resident alien who needs to file a US tax return.
  2. You must be a US resident alien who has to file a US tax return.
  3. You should be a dependent or the spouse of a US citizen or resident alien.
  4. You must be a dependent or spouse of a non-resident alien VISA holder such as H4 VISA.
  5. You should be a non-resident alien who is claiming a tax benefit.
  6. You should be a non-resident alien student, researcher or professor filing a US tax return or for claiming an exception.

Procedure to obtain ITIN

  • For the process of applying for ITIN, you will need the below-mentioned documents.
  1. Form W-7
  2. IRS Application for Individual Tax Identification Number.
  3. Your federal tax return. But, if you are eligible for an exception then you must provide the supporting documents as well for the exception.
  4. Original documentation from the issuing agency for proof of your identity and foreign status.
  • Since, you will be filing your tax returns in the form of an attachment to your ITIN application you should avoid mailing your filled form to the address which is mentioned in Form 1040, Form 1040A or even Form 1040EZ.
  • You can send your Form W-7, tax return, and other documents either to the mailing address mentioned in Form W-7 or submit it at the walk-in offices of the IRS. You can also get your form and documents processed by an agent who has been appointed by the IRS.
  • These Acceptance Agents are those entities such as colleges, financial institutions, accounting organizations, etc. who help the ITIN applicants in obtaining ITIN. These Acceptance Agents would review the application forms and would forward them to IRS for further processing.

Timeline within which ITIN must be applied

When you are ready to file your Federal Income Tax Return, you should also complete your Form W-7. This needs to be done as the return would be needed to be attached to FormW-7.

If you are qualifying for any of the exceptions, then you do not need to file a tax return. You would only submit Form W-7 along with those supporting documents which provide proof for the exception. An applicant is allowed to apply for ITIN during any time of the year but if you need to attach the tax return to Form W-7 and that tax return is filed after the due date then you might have to pay penalties.

When will you receive your ITIN?

 The IRS usually takes a time of around two months to complete the processing of the ITIN form. If your documents and details are correct, then your form would be processed and ITIN would be sent to your mailing address approximately within two months.

However, if even after 2 months you do not receive your ITIN or any other document/correspondence from IRS then you can call IRS at the Toll-free number and enquire about your ITIN application.

Hence, ITIN is very much necessary for tax return and if you are filing your tax return with an expired ITIN then your request would be processed but you will not receive any tax exemptions or credit claims.

Reference

  1. https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin
  2. https://www.hrblock.com/tax-offices/tax-prep/itin-application.html
  3. https://internationalcenter.umich.edu/resources/tax/getting-itin
  4. https://studyinthestates.dhs.gov/what-is-an-itin
  5. https://www.immihelp.com/itin-individual-taxpayer-identification-number/

 

 

 

 

 

 

 

 

Can You File Your Taxes In The US Without A Social Security Number?

Can You File Your Taxes In The US Without A Social Security Number?

by | Dec 30, 2019 | EITC, global income tax, IRS, ITIN, SSN, Tax Payers, Tax Planning, Tax Refund, taxes, W-7 Form

Can You File Your Taxes In The US Without A Social Security Number?

Citizens of the US use their Social Security Number as identification when it comes to doing their taxes. However, there are a lot of citizens from other places who do not qualify for SSN, yet earn in the country and are liable to pay taxes. If you are one such citizen, you can use the Individual Taxpayer Identification Number or ITIN to file your taxes instead of SSN.

ITIN’s Capabilities

The ITIN is designed only to help citizens without an SSN the capability to file taxes and nothing else. The IRS clarifies that the ITIN cannot be used as:

  • An authorization to work in the US
  • Qualification for SSN or other tax credits such as Earned Income Tax Credit (EITC)
  • A stimulus to impact your immigration status

Who Needs an ITIN?

Anyone who needs to file their taxes and does not have an SSN can apply for ITIN. If you have a dependent and want to claim them in your tax returns and they do not have an SSN, you would need to get an ITIN for them as well.

As per the IRS, resident and non-resident aliens can get ITIN irrespective of what their immigration status is. An easy way to understand is that you would need an ITIN if you need to file your taxes. This is applicable even if you stay in another country.

How To Apply For ITIN?

Getting your ITIN isn’t all that complicated. To apply for ITIN, you need to submit Form W-7 to the IRS. You can either submit the form by mailing it to the IRS or schedule an appointment if you need any helpwith the forms.

To fill the application form, you would need certain basic details such as name, birthdate and mailing address. You would have to mention your US visa number should you have. Also, the form requires you to mention the reason why you want to apply for ITIN.

Expiry of ITIN

An issued ITIN can expire if it has not been used. If you obtain an ITIN and do not use the same for a period of three years, the ITIN will expire on the 31st of December 2019. ITIN that were issued before the year 2013 would also expire on the 31st of December 2019. The middle digits for the ITIN in such cases would be 83 and 84. For example, you ITIN could look like (9XX-83-XXXX).

Renewal of ITIN

In the event your ITIN expires, you do not have to worry about filing your taxes. You can always renew the ITIN using the following measures. You must fill up Form W-7 along with an application form for ITIN. While you are required to submit the required documents, you do not have to submit a tax return in the case of renewal. Unless there is a filing requirement, you do not have to submit your tax returns. If your family members were issued ITINs, you must submit their W-7 forms at the same time.

The renewal process of ITIN is a bit similar to getting a new one. You can use any of the following methods.

  • Mail the forms to the IRS at:

Internal Revenue Service

Austin Service Center

ITIN Operation

P.O. Box 149342

Austin, TX 78714-9342

  • Schedule an appointment with the IRS Taxpayer Assistance Center.
  • Apply for an ITIN in person at any Certifying Acceptance Agent that is authorized by the IRS.

You can file your taxes in the US even if you do not have a Social Security Number. You can apply for ITIN using the methods mentioned above and file your taxes.

Reference:

https://www.taxslayer.com/blog/how-to-file-taxes-without-a-social-security-number/

https://www.irs.gov/credits-deductions/individuals/how-do-i-renew-my-itin