Form W-9: Do You Use Independent Contractors? This is what You Need to Know and “DO”
If you use the services of independent contractors and other business owners, you MUST ask them to give you a form W-9. The W-9 form should be completed by a “U.S. person” who is a U.S. citizen or legal resident and has earned over $600 in that year. This will enable you to file forms 1099 NEC at the end of the year.
From form W-9 to 1099
The only purpose of the W-9 is to enable you to file forms 1099 NEC by January 31st of the following calendar year. Don’t wait until the last minute to request the W-9 Forms. You should do it as soon as you hire an independent contractor.
What happens if a W-9 is not filled out and you can’t file therefore the 1099 NEC?
You will get a penalty up to $50 to $270 depending on how long past the deadline your business issues the form with a maximum fine of $556,500 per year. So start right away collecting form W-9 after hiring a new contractor or vendor.