What is the infamous W-9 form? Taxable nonprofit 501c3 organizations and other as required by the Internal Revenue regulations accurately report any and all payments for services received from trade, business or individual who is not treated as an employee of the agency.
Non-Commuters Get W-9 Form
As many of my readers are already aware, individuals who are considered employees of any company historically completes a detailed job application, fill a W-4 form show any dependents they are required, and complete mandatory I-9 form . Employees will eventually issued a W-2 form by the end of the tax year reflects what they earned and what taxes have been deducted.
An expedient and easily understood method to describe those who are not employees is simply to recognize that they are people who do not receive W-2 Form by the end of the year and that certainly would not be able to withstand IRS employee testing. Since these individuals are not on the payroll of the agency, they will get the benefits of other means of payment
Examples of the types of payments are :. Honorarium, administration, salaries, love offering, contribution or payment for services rendered. Many times I’ve heard the IRS stating “what benefits are called does not matter, and in the eyes of the IRS, insignificant.” Compensation is compensation!
W-9 timing is critical
The IRS regulation further emphasizes that the W-9 Form must be received on a tax-exempt organization before service is provided. Before a check can be cut and / or processed, the taxpayer’s Identification Number (TIN) or Social Security Number vendor, contractor, Speaker, Teacher, preacher, counselor, etc. need along with the full name and current address.
Delays in providing Tax identification number (TIN) or social security number (SSN) should always delay passing writing process. Contrary to historical belief this practice applies even when the payment amount is below the normal range of $ 600 before 1099 application is required.
Please note that the tax identification number provided must match or correspond to the person who the check is payable. In addition, if tax ID is not provided, then about 28% – 31% of the gross amount of compensation will be maintained by a nonprofit required withholding taxes. The withholding tax is then submitted to the appropriate tax revenues Dept of IRS on behalf of taxpayers as the IRS code compliance 1402 section C.
W-9 IRS consequences
If business tax will not start this W-9 and / or taxation process, serious fines or penalties may be imposed on tax exempt organization itself and given on the basis of the incident, per person. Incidentally, the incident, the person could be applied to all officers, directors, pastors, or directors even though they did not directly handle the transaction.
So remember to ask for a W-9 form for all transport services to the tax exempt company and give the 1099-misc form at the end of the year. For more information on the proper use of any information and methods, and other basic taxable content, please also see the 1099-misc series of articles.