The period between January 1 and April 15 of each year is a daunting era for all employed individuals. This time they have to prepare the previous year’s financial statements and reports. Businesses can’t lose focus as well as they must provide employees, independent contractors and others with certain tax documents specifying information to be completed by the recipient.
Since in recent years most corporations switch their documentation to digital format, it is much easier now to cope with tonnes of cumulative data.
One of the highly in-demand documents is W-9 Form, Request for Taxpayer Identification Number and Certification. It serves as an important part of 1099-MISC Form.
Below read more about the document and find answer to the most frequently asked questions on this form.
The document is furnished to independent contractors and freelancers hired by a certain company. Most likely you receive the W-9 Form immediately after the successful interview.
Regular employers receive W-4 Form. In contrast to them, the superior can’t withhold taxes from your paycheck. That’s why the Form comes first for you. You have to deal with it even if you are a resident alien.
The document informs the IRS that you are self-employed. This means that your superior may not deduct payroll taxes from your salary. However, you have to pay Medicare and Social Security taxes.
The process of the form preparation is the following:
It is much more convenient to have the employee’s data recorded as early as it is possible, rather than pull it until the end of the fiscal year.
Note that it is critically important to provide only truthful and correct information in order to avoid any unpleasant consequences.
Providing false data on W-9 may lead to serious civil and at worst criminal penalties. In case you provide incorrect TIN, the Internal Revenue Service binds you to pay $50 for each failure. In case you make a misstatement that leads to no tax withholding, you have to pay a fine of $500.
Note that the IRS can easily find out whether your actions were due to negligence or a willfully fraud. In the second case, you may be summoned to court and face criminal prosecution charges. If the court finds you guilty, then you can go to jail.
When completing the IRS Form W-9, review all the information. Specify details you are not sure about. Remember that this is for your sake. Only one false move may ruin your professional and personal life.