Requesting Form W-9 From Independent Contractors
When and Why Do You Need Form W-9?
You can’t fill out and issue Forms 1099-MISC to your vendors or independent contractors unless you first obtain a completed Form W-9 from each of them. You must know the name, address and taxpayer identification number of each vendor or contractor who requires a 1099-MISC.
Who Must Issue Forms 1099-C?
The Instructions for Form 1099-MISC from the Internal Revenue Service explain the various situations that require a business to issue Forms 1099-MISC.
You must complete, file and issue this form to all vendors or contractors—not employees—to whom you have paid $600 or more during the year.
An employee is anyone whose work you or your business control. If you pay someone to answer your telephones, he’s most likely an employee because you set his hours and dictate what he should be doing while he is on the clock. Employees do not require 1099-MISC form.
If you pay someone to clean your office when you’re not open for business and he arrives and does so at times left to his discretion, he’s most likely an independent contractor and he requires Form 1099-MISC. The Internal Revenue Service explains the finer points of identifying independent contractors vs. employees.
Exceptions to the Contractor/Vendor Rule
You do not have to issue 1099-MISC forms to C- and S-corporations or to entities from whom you purchase products, such as merchandise you'll later resell.
Payments made to contractors and vendors by debit card, credit card or through third parties like PayPal are also exempt—the IRS uses a different method to track these transactions.
When to Ask for a Completed Form W-9?
It's a good practice to request that an independent contractor provides a completed Form W-9 as soon as the business knows it will have to issue him a 1099.
But sometimes we let these requests slide until January when we’re looking over our accounting records and realize we haven’t gotten around to it.
If you must issue a 1099-MISC and don't have a completed W-9 form on file, say something like, "Hey, I'm going to be sending out your 1099-MISC by the end of January and I realized I don't have a W-9 from you. Could you fill out one and send it to me?" This lets the contractor know that the information on the Form W-9 will be used to generate a specific tax document.
Encourage people to send you their completed Form W-9s in a secure manner. A completed W-9 includes sensitive information such as a person's Social Security number. This data should be kept as private and secure as possible to minimize the risk of the data falling into the wrong hands. Transmitting a completed Form W-9 as an insecure file attachment to an email is not recommended. Ask to receive it by mail, hand delivery, or as a password-protected file attachment to an email.
NOTE: Tax laws change periodically and the above information may not reflect the most recent changes. Please consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and is not a substitute for tax advice.
- Learn more about Form W-9
- Download a blank Form W-9 from the IRS (pdf)
- Download the Instructions for Requesters of Form W-9 from the IRS (pdf)
- How to Prepare Form 1099-MISC for 2013 (About Business Law & Taxes)