Client has requested "tax information" for payment

I've just started freelancing -- I'm thrilled and terrified at the same time.

I've been working for about a week for a good client -- (I'm working in the USA where I am a citizen). This new client has requested that I forward "some tax information in the near future" so they can pay me -- but what the heck does that mean?

I'm comfortable enough to simply ask them -- but, I was wondering what I'll be needing. I recently read Site Point's "The Principles of Successful Freelancing" -- and I know I'll be working as a individual (and not a business) -- and thus a "sole proprietorship".

I assumed that simply my social security number would be enough for tax/legal purposes -- is this correct?

I'd love to hear what others are doing.

Cheers,

R

If you are going to give them your SSN, do it with an actual form (I'd assume 1099). Don't just give them your SSN in an email, there is no reason they would just need that for tax purposes. A 1099 would make sense.

If you're comfortable enough with your client, you should just ask them why they require your SSN. They'll tell you why and you can follow Village's advice from there (assuming they'd be asking for a 1099; They'll tell you which form they'll require from you.)

If you're a sole proprietor, they need to send you 1099 for you to fill out. If you were registered as a small business, say an LLC or S-Corp you would have a Tax ID, but sole proprietors use their SSN instead. It's not an unusual request and is something you'll most likely be asked to do again.

Your clients are required to report income paid to you when it's over a certain amount (I don't remember what the number is, it may be as low as $500). This information is matched to information on the Schedule C (profit or loss from a business or profession) you file with your annual taxes. But basically they only look to make sure that you have reported at least as much as your combined 1099s state you earned.

While you can use your SSN for identification, if you are uncomfortable with the idea of making it available to so many strangers, you can apply for a tax id number and use that instead. (In New York, where I'm based, the state government prefers that you do this.)

Registering your business in this way (it doesn't cost anything and you can do it online) usually also means that you can avoid paying sales tax on items you buy in retail stores but plan to resell in some form to clients.

Get tax id number and use that instead, as suggested above. Under no circumstances give your SS number.

In the US, the amount that triggers the need to issue a 1099 is $600. You don't fill out a 1099 - the person who pays you must. They must file one with the government and send a copy to you so they need to have your full name, address and either a tax number or social security number.

I strongly advise that you follow the advice on getting an EIN (commonly referred to as a tax id) as it's different than your SSN which is much more confidential. In the event that the client attempts to use it for malicious purposes, you won't have to worry as much as it's not as damaging as your SSN.

This goes for everyone else as well.

The above suggestion is a very good one, just in case you run into a scammer. It doesn't cost anything, either. Just call the IRS and they can take care of it for you. You can try the website, too - it might be something that can be applied for there.

That is correct, the IRS allows you to instantly register for a EIN online at no charge. https://sa1.www4.irs.gov/modiein/individual/index.jsp

Or if you don't want to do it online, just fill out form SS-4 and mail it in.