The Internal Revenue Service requires income paid to freelancers and independent contractors to be reported on Form 1099-MISC. If you’ve been working as a freelancer or an independent contractor, you will receive one from the payor. Then, you can use the Forms 1099 to file your income tax return, the same as how workers use their Form W-2.
To complete your Form 1099-MISC, the payor needs your taxpayer identification number or social security number. Although you could provide this information beforehand, you may be requested to complete a Form W-9 so that the payor can complete the Form 1099-MISC correctly.
If the request hasn’t complied, then the payor can forward about a quarter of your earnings to the IRS. This is called a backup withholding. Since the payor cannot report your income on Form 1099-MISC because you’re not giving your taxpayer identification number with a Form W-9. Also, in this case, you will be subject to a $50 fine by the IRS.
Filing a Form W-9 in 2020
Unlike most other tax forms renewed by the IRS, Form W-9 is updated once every few years. Given you only use this form to provide your information to the payor, nothing significant needs to change on Form W-9. Over the years, the updates on Form W-9 did not change how the Form W-9 is completed.
The latest change on Form W-9 occurred in 2018. In 2020, you will use this version of Form W-9. Until the IRS updates the Form W-9, which usually happens at the end of the year, the below version of it is going to be used to provide taxpayer identification number.