The business relationship between a freelancer and a contracting party must be legally affirmed by several documents, with the primary being the contract describing services and their cost. In addition, the Internal Revenue Service obliges the parties involved to report the business deal.
If you are this kind of a freelancer, there are some tax-based steps that you must take while getting into the agreement with a contractor. Initially, you are required to provide the contractor with the information about your taxpayer identification number (TIN), so that they will be able to file Form 1099-MISC to report the income equal or exceeding $600 for your services. You, in turn, will need the data form Form 1099-MISC sent to you in order to calculate your yearly income and file the federal income tax return.
So, as for step one - TIN communicating - it must be delivered to the contracting party on Form W-9. If you appear to ask yourself “How do I Get a W9?” the answer it on the surface - download a printable W-9 form from the IRS website. Remember, that the IRS typically revises the most applicable forms once a year with several even minor changes possible, so make sure the W-9 (Request for Taxpayer Identification Number (TIN) and Certification) you download is the last updated version. There are also instructions available prepared by the IRS there, too.
Having figured out how to properly fill out the free fillable W-9 and done so, send it over to the requesting party who employed you. Don’t send the document to the IRS, nor the recipient will have to do it. The W-9 will be simply used for reference and retained by the contracting party.
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