why would my lawyer send me a w9

Selected as best answer Yes, it has to be reported and the W-9 is used to verify you are who you are. Most attorneys today require the W-9 because they don't want to be on the hook for your taxes.

Full Answer

What happens if someone asks you for a W-9?

If someone other than a client, bank, or other financial institution asks you for a W-9 form, you might want to think twice about sending one. This type of information can lead to identity theft and should be protected as such. What is backup withholding?

Do I need to file a W-9 for a settlement?

Most attorneys today require the W-9 because they don't want to be on the hook for your taxes. Now how you treat the settlement on your taxes is a different story. They are required to report payments made in settlement of claims or debts if withholding MAY be an issue.

Why do I need a W9 to sell stuff?

There’s really only one reason this might be the case, and that’s if you’re buying goods and reselling them for a commission. For example, if you’re selling for a company like Tupperware or Avon, they might need a W9 from you. But in that case, it’s because they’re paying you a commission.

Do you have to fill out a W-9 for every contractor?

To be safe, some businesses will send out Form W-9 to every single one of their contractors to fill out ahead of time, even if they don’t expect them to perform $600 of work for them. Some accountants will even suggest collecting a W-9 before issuing any payments at all to encourage people to file up-front.

What is a W9 used for in settlement?

The Form W-9 is a means to ensure that the payee of the settlement is reporting its full income. Attorneys are frequently asked to supply their own Taxpayer Identification Numbers and other information to the liability carrier paying a settlement.

Why am I being asked to fill out a W9?

You will usually submit a W-9 form when you engage with a company where reporting information to the IRS might be necessary, such as receiving payments for services you provide as an independent contractor, paying interest on your mortgage or even contributing money to your IRA account.

Do I have to pay taxes if I fill out a W9?

In general, income that results from a W-9 arrangement is not subject to IRS withholding. Rather, it is the payee's responsibility to claim the income on his or her tax return, and to pay any appropriate taxes.

Can I refuse to fill out a W9?

Yes, you can refuse a request to fill out the W-9 but only if you are suspicious as to why a business has made the request. Be wary of filling out the W-9 if the business does not have a legitimate reason to ask you to fill it out. If you are a full-time employee, it's not necessary to fill out a W-9.

Who is required to fill out a W9?

Employers who work with independent contractors must provide them with a W-9 form to fill out before starting work. There are specific criteria for who is classified as an “independent contractor” and will need to fill out a W-9 form.

Who gets a W9?

W-9 forms are for self-employed workers like freelancers, independent contractors and consultants. You need to use it if you have earned over $600 in that year without being hired as an employee. If your employer sends you a W-9 instead of a W-4, the company has likely classified you as an independent contractor.

What happens if a W 9 is not filled out?

Failure to Provide W-9 – If a vendor or contractor refuses to provide a W-9 when its requested the Payee is subject to a penalty of $50 for each such failure.

What is the difference between an I 9 and a W 9?

The key difference between I9 and W9 are that I9 form is an official verification of identity and legal authorization to work required for all paid employees whereas W9 is a form filled by third party companies such as independent contractors who provide services to companies, upon the request from the respective ...

Is a W 9 and a 1099 the same thing?

W-9s and 1099s are tax forms that businesses need when working with independent contractors. Form W-9 is what an independent contractor fills out and provides to the employer. Form 1099 has details on the wages an employer pays to an independent contractor. This form is filed with the IRS and state tax authorities.

Is a W9 form mandatory?

In general, W-9s are required only for business-to-business relationships where more than $600 is paid in the calendar year. The $600 rule applies to labor and services. For direct sales, a W-9 is required for total purchases over $5,000.

What happens if you hire a lawyer to represent you in a legal case?

If you hired this lawyer to represent you in legal proceedings, and the end result was a monetary award that you won in the case, most likely the lawyer collected the award in it's entirety. Then send you the remainder after deducting their legal fees.

What is attorney fees on 1099?

Attorneys' fees of $600 or more paid in the course of your trade or business are reportable in box 7 of Form 1099-MISC, under section 6041A (a) (1). Gross proceeds paid to attorneys. Under section 6045 (f), report in box 14 payments that: Are made to an attorney in the course of your trade or business in connection with legal services, but not for the attorney’s services, for example, as in a settlement agreement; Total $600 or more; and Are not reportable by you in box 7. Generally, you are not required to report the claimant's attorney's fees. For example, an insurance company pays a claimant's attorney $100,000 to settle a claim. The insurance company reports the payment as gross proceeds of $100,000 in box 14. However, the insurance company does not have a reporting requirement for the claimant's attorney's fees subsequently paid from these funds.

When is the 1099 due?

Actually the due date to file a 1099Misc with the IRS is now the same as to the person Jan 31.

Is an attorney the exclusive payee?

These rules apply whether or not: The legal services are provided to the payer, The attorney is the exclusive payee (for example, the attorney's and claimant's names are on one check) and even if, Other information returns are required for some or all of a payment under section 6041A (a) (1). For example, a person who, in the course of a trade or business, pays $600 of taxable damages to a claimant by paying that amount to a claimant's attorney is required to:

Do you get a 1099 if you settle?

If you are getting a settlement, she probably wants to issue you a 1099-misc.

Is the lawyer's SSN on the W-9 correct?

If it's the Lawyer's SSN or EIN on the W-9, then you're spot on correct.

Do you report attorneys fees to corporations?

Payments to corporations for legal services. The exemption from reporting payments made to corporations does not apply to payments for legal services. Therefore, you must report attorneys' fees (in box 7) or gross proceeds (in box 14) as described earlier to corporations that provide legal services.

What to do if someone sends you a W-9?

If you’re suspicious about a W-9 that someone has sent you, ask them which tax forms they plan on sending you back after you fill it out. If you can’t get a straight answer, talk to a tax professional. Remember that the only reason anyone would ever need a W-9 from you is because they need it to send you some kind of IRS form.

Who has to fill out a W-9?

There are four common situations in which you might be required to fill out and send someone a W-9 form:

What is form W-9?

Form W-9, Request for Taxpayer Identification Number and Certification is a one-page IRS information form that individuals and businessesuse to send their taxpayer identification number to other individuals, clients, banks and other financial institutions.

What if I’m collecting W-9? Any tips on getting people to file?

If you’re collecting W-9s, you should make sure to send them well before the 1099 deadline. The deadline for form 1099-MISC is January 31, and most other 1099s are due around the same time.

What is the amount of back up withholding for contractors?

If a contractor has been told by the IRS that they’re subject to “backup withholding,” that means the businesses paying their invoices have to withhold income tax at a flat 24% from the invoice and remit it to the IRS.

What is a W-9?

W-9 is a straightforward “information return,” meaning it’s just for giving someone else a piece of information they need (rather than the IRS). But because you’re not sending it to the IRS, you need to be careful about who exactly you send it to. Here’s everything you need to look out for when filling it out.

How many pages are in a W-9?

W-9 is a one page form from the IRS. It also comes with five pages of instructions. The part that you have to fill out looks like this:

What happens if you don't agree to a W-9?

Usually, if they don’t agree the money simply will not be paid, or the payor will withhold 24% and send it to the IRS. Still, the Form W-9 may make you uneasy.

What is a W-9?

A Form W-9 verifies your taxpayer ID number, typically your Social Security Number, or if you are a company, your employer identification number. If you want to be paid, refusing to hand over a W-9 may not make sense. The IRS says that anytime a payor thinks they may have to report a payment on an IRS Form 1099, they should ask for a Form W-9.

What is a 1099 on a tax return?

Forms 1099 allow computer matching of Social Security numbers and dollar amounts paid and received, so IRS collection efforts are streamlined. Failing to report a Form 1099 on your tax return (or at least explain it) triggers an IRS notice asking you to explain or pay up . Thus, if you receive a Form 1099, report it, ...

What to report if you receive a 1099?

Thus, if you receive a Form 1099, report it, even if you are claiming that the money should be tax free. Form W-9, Request for Taxpayer Identification Number and Certification. Say that a lawyer settles a case for $1 million, with payment to the lawyer’s trust account. Assume that 60 percent is for the client, and 40 percent is for the lawyer.

Does a lawyer receive a 1099?

The lawyer is sure to receive a Form 1099 reporting the full $1 million as gross proceed s. The lawyer can report as income the $400,000 fee without worrying about computer matching, since gross proceeds do not count as income. The client isn’t so lucky.

Can you file a lawsuit for 1099?

Recipients may not like this, and lawsuits for issuing Forms 1099 are filed on occasion. Most such suits don’t seem to go very far, perhaps precisely because it is often possible to justify whatever was issued. So, while you probably will have to provide an IRS Form W-9 to get paid if that form is requested, try to head off Form 1099 issues ...

Is a W-9 worth fighting about?

Thus, when a payer requires a Form W-9, it is usually not worth fighting about providing it , especially if there is already an understanding about which Forms 1099 will be issued. Disputes about Forms 1099 are common. The Form 1099 regulations are complex, which causes many businesses to err on the side of issuing the forms.

Why do executors fill out W-9?

Executors ask the heir to fill out Form W-9 so the executor can report income properly to the IRS. Form W-9 can be used by individuals or corporations. If the heir is an individual, she needs to simply write her Social Security number in the proper space.

What form do executors fill out?

Some estates require the executor to file tax returns with the Internal Revenue Service. To file taxes, the executor might ask heirs to fill out IRS Form W-9, Request for Taxpayer Identification Number and Certification.

2 attorney answers

Yes, it has to be reported and the W-9 is used to verify you are who you are. Most attorneys today require the W-9 because they don't want to be on the hook for your taxes. Now how you treat the settlement on your taxes is a different story...

Richard Glenn Elie

If your settlement, as I suspect, includes debt forgiveness by the creditor, that forgiven debt is treated as taxable income by the IRS. Speak to your accountant about this. There may be strategies to minimize, or eliminate, the payment of additional taxes on your next filed return (like a Notice of Insolvency, if appropriate).