Being a freelancer you are obliged to report the income earned as a business entity from all the payers who contracted you for certain works and paid $600 or more for the services. Such type of business interaction not only must be properly recorded on applicable contracts but also be correctly reported to the Internal Revenue Service. And here is where it is very important to follow the strictly defined procedure. When employing the contractor, the employer must obtain their Taxpayer Identification number. It is to be done via a specifically designed printable W 9 form - Request for Taxpayer Identification Number (TIN) and Certification.
The document must be filled out by the contractor where they provide their full legal name, business name, address and either SSN or EIN (Employer Identification number) in Part 1 for TIN details. After completion, the W-9 must be dated, signed and directed to the contracting party, who will keep it for reference and verification purposes.
The employer will have to look up to the received document while filling out 1099-MISC Form - Miscellaneous Income. In the box RECIPIENT’S identification number the payer is required to enter the contractor’s TIN (SSN or EIN) as it is indicated on the fillable W-9 submitted beforehand. This particular data is important to the IRS to help avoid confusion while identifying individuals involved. And that’s basically what W-9 Form is used for - to enable the employing party to use the data while reporting paid amount to the IRS, yet it is should be kept in mind that the document does not have to be delivered to the IRS.
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