You may need to obtain a Form W-9, Request for Taxpayer Identification Number and Certification, from contractors or small businesses that you buy goods or services from if you will be making payments to them of $600 or more in a tax year.
The Form W-9 is used to collect the contractor’s or small business’s taxpayer identification number (TIN) and other information that is needed to report the payment to the Internal Revenue Service (IRS).
This information is used to report the payment on your tax return, as well as on the contractor’s or small business’s tax return.
Obtaining a Form W-9 from contractors or small businesses is important for several reasons:
1. Tax reporting: The Form W-9 helps to ensure that you have the necessary information to report payments to contractors or small businesses on your tax return.
2. Tax compliance: By obtaining a Form W-9 from contractors or small businesses, you can help ensure that these individuals are paying their taxes and are in compliance with IRS regulations.
3. Risk management: Obtaining a Form W-9 can help you manage risk by ensuring that you have the necessary documentation to support your tax reporting.
Overall, it’s a good idea to obtain a Form W-9 from contractors or small businesses that you make payments to in order to properly report these payments on your tax return and ensure compliance with IRS regulations.