Form W-9 is a one page document which is easy to fill out and understand. Usually it doesn’t take much time and effort to complete it. Besides this, the form has a detailed instruction which will answer all your questions.
W9 editable form contains three parts. In this article we’ll discuss the peculiarities of the trickiest form details. The taxpayer has to remember that mistakes in Form W-9 can lead to backup withholding, problems with payment receiving and some other issues.
Let’s start with the fourth line of the form’s first part. It asks the taxpayer to add specific exemption codes: exempt payee code or exemption from FATCA reporting code. Exempt payee code is an exemption from backup withholding. Keep in mind that most businesses are not exempt from the backup withholding which means the employers have to withhold a federal income tax from their payments. To find out whether you are subject to backup withholding, call your tax advisor.
The second box is completed once the taxpayer submits the form for accounts outside the US. If it’s not applicable to the taxpayer, they leave this line empty.
The fifth and sixth lines should contain the destination address where your Form 1099-MISC should be mailed.
The second part of the form is the most important. Here the taxpayer has to add the social security number or employer identification number. Let’s see what is the difference between these two options.
In case you are a sole proprietor, it’s highly recommended to add a social security number.
If you are a single member LLC, you can add either SSN or EIN.
If you are a member of partnership or corporation, enter EIN.
You can ask your tax advisor or IRS directly which type of taxpayer identification number to use. The last part of w9 form online free certifies that you add the correct TIN and not subject to backup withholding.