Ok, then it’s perfectly normal for them to require a W9 from you before they’ll pay you 
You’re right — my bad! I had W-9 mixed up with 1099. 
So…wait…you guys are designers too? Or just businesspeople.
Interestingly, one of the interns who worked for me (earned about $1000 in 2007) was also questioning the 1099 process. Mine haven’t been mailed out yet, and he called and asked when it would happen. He also wanted to confirm that the amount paid, and the amount that he’s claiming is about $500 less than what I’m reporting to the IRS!
He seems to think that the IRS will always side with the contractor when the 1099 doesn’t match the amount claimed. I informed him that the real risk is that HE will get audited, since it will appear that he is claiming less income than he earned. I checked the books and the payroll checks, and I’m certain about the numbers so I basically had no choice but to tell him that there’s nothing I can do and I would file the forms within a couple of days.
For a while, he insisted that I not report a different figure than he did. It turns out, he had ALREADY filed his taxes using a software package and it’s too late for him to make changes without refiling. Big surprise, he’s getting a huge refund (almost always a sign of someone who isn’t as tax-savvy as they could be)! Most likely the IRS won’t notice, but if they do it could be a bit painful for him.
Bottom line: These basic tax laws are fairly clear and not really open to creative interpretation. There are certainly a lot of esoteric and ambiguous tax codes, but the ‘do I have to file a W9’ isn’t one of them!
I’m new to sitepoint, but not new to tax issues. I completely understand your point f0cusIT.
Where to begin? First, to keep track of payments made and payments received the IRS first requests we have receipts to show who and how much we paid, they also request we keep copies of invoices we have billed out and tracked payment of. These receipts and invoices are to be kept in a safe place as proof of claims made on Federal income tax forms.
Next the IRS requests that we provide forms 1099misc to all contractors (meaning anyone we pay who is not an employee). These forms are mailed to contractors and filed with the IRS. To complete a 1099 the payer must have certain information from the receiver. The IRS created form W-9 as an official document to gather this information.
Basically the IRS is trying to keep track of all taxable income. If you claim a deduction for paying someone the IRS wants to know who you paid, so they can be sure that person is paying taxes on that income. A good example is babysitters. If a person wants to claim a deduction on their income tax for childcare services they must provide the tax information of the caregiver along with the amount paid to that caregiver.
I agree you should have been informed before you started your last project. Most companies require a W-9 and other pertinent documentation such as proof of insurance before they will even contract with you.
To protect her non-profit status your client must comply with all applicable laws. You should receive a 1099 for all work completed for her including that which was paid before you provide a W-9.
Many people do not request W-9s. Many people do not distribute 1099s, and many people do not report all of their income. These are facts we cannot change and which the IRS does not have the resources to police.
If you do not feel comfortable giving your personal info such as SS# to this accountant it is simple to obtain an EIN immediately by phone or online. The EIN can be used in place of the SS# and you do not have to be an employer to obtain one.
This post has become really long. If you or anyone else would like the EIN information, just ask and I will post it here.
I hope this helps a little.
Wouldn’t it be great if we kept as good track of the money AFTER the government gets it?
So, are you gonna send the W9 or not? What’s the verdict?
Some companies do not correctly handle W-9 issues. But if you do not complete the W-9 when requested, at a minimum, they can withhold taxes from the amount they pay you. This is required by the IRS PERIOD. Most major companies these days request a W-9 from all companies whether corporations or not, and some will not do business with a vendor until the W-9 has been received. Our company will not authorize our branches to do business with ANY vendor until they have provided us with a W-9.
We sent them the high resolution images only after they made a 50 advance payment against our invoice. It is pertinent to note that we have directly invoiced the trip organiser This transaction took place a month ago; yesterday they sent us an e-mail, informing us that more than half our images have not been used and expect a refund.
If they only paid you HALF of the original invoice then only used HALF of the photos, in my book that makes you even. No, I would not refund them.
Sagewing and others,
I recently incorporated; before that I was working as a sole proprietor and was filling out W-9’s. I am totally new to corporations and just starting to figure out the rules. A client of mine just asked for a W-9, I told him I was incorporated so he didn’t need it, and he explains to me that it is a requirement of all payments. I assume he must be speaking of his company, not the law? Is there any downside to providing this to him? Why is it not required when the form does have a checkbox for incorporations? I am waiting for my Inc paperwork in the mail and it will have a Tax ID number, correct? Legally, what is it that I need to provide to clients, just the number but not in a W-9?
Thank you ahead of time for answering my questions!
Alexis
It is not required in most circumstances. However, there is theoretically nothing to be lost by having someone else inform the IRS that they made payments to you. That is, unless you will be cheating on your taxes.
Some large orgs require filing from everyone that they intend to pay, so that they don’t have to bother figuring out who made more than $600, who is a corporation, etc.
For a client or small company, I generally refuse to send anything, however. My reason is simple: it’s not required for a corp-to-corp transaction and every time a client has tried to 1099 me they screw it up with the wrong amount and that increases the chance that I have to deal with the IRS.
Thank you for the response. I have one more question. As a corporation, the client is not supposed to 10-99 me, correct?
I assumed that they still need to report that they paid me, but how do they go about doing that?
If they want to report payments to you, they’d use a 1099. There are some circumstances where they will have to, but generally they don’t. Some companies insist on it, most do not.
Note that when they 1099 you a copy will be sent to both you and the IRS. Be sure that it’s accurate, and if not you need to ask them to send an updated 1099 out.
Good to know… I had thought it was reported some other way. This is all new to me. Thanks!
I am a graphic designer that own my own business, which is an LLC. Large clients keep requesting that I fill out W-9s in order to do business with them. I am questioning if I have to do this since I am an LLC? Also, I’ve been charging these companies sales tax even though I’ve filled out a W-9? Am I in the wrong for this? There are many companies that I deal with that don’t require W-9’s and I charge them sales tax as well that I report quarterly. Is there something that says as a graphic designer, all companies I deal with should require the W-9 from me and that I shouldn’t have to charge them sales tax? Where is the line that is drawn as to whether I am selling a product (retail) that is taxed or selling a service and be forced to fill out a W9? I don’t get it, but I want to make sure that I am taxing clients the correct way.
I am a UX designer which is similar. I’ve never heard of designers charging sales tax. I never have. What state are you in?
I’m in Texas. On anything that you buy here, there is a sales tax.