Does a 1099 Contractor Have to Give an SS Number?
When you work as an independent contractor, you do not have to give your Social Security number to any company with which you have contracted work because there are no laws that require it. The Internal Revenue Service considers anyone whose earnings are reported on a 1099 MISC as an independent contractor or self-employed. You are an independent contractor or self-employed if you complete work or projects for a company and you, not the company, control how the work is completed. This means the company has control over the results of the job it hired you to do and the day it is due, but not the way in which you will go about completing the job.
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Social Security Number Income Tax Purposes
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The IRS uses your Security number to identify you for individual income tax purposes. Even though there are no laws that require you to provide your clients with your Social Security Number, the law does require that you pay income taxes on self-employment earnings over $400. If you are a church employee paid on a 1099 basis and your earnings are $108.28 or more, you are also required to pay self-employment taxes.
Social Security Number Business Tax Purposes
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When a client pays independent contractors amounts over $400 for non-church employees and $108.28 for church employees, it is subject to IRS Non-payroll Income Tax Withholding. To report Non-payroll Income Tax Withholding accurately, companies must submit a 1099-MISC form to the IRS for payments made to independent contractors. Companies who hire independent contractors will still report payments they made to you to the IRS via form 1099-MISC without your Social Security number.
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Failing to Provide a Social Security Number
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If you work as an independent contractor and fail to provide a Social Security number to your client for tax reporting purposes, the IRS requires your client to withhold 28 percent of the payments it makes to you. The IRS refers to this as backup withholding. For instance, you contract with a client that pays you $1,000 for work. If you fail to provide your Social Security number, your client will pay you $720 for your services and hold $280 for the IRS backup withholding requirement.
Considerations
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If you refuse to provide your Social Security number to your clients, they may refuse to continue to work with you. When considering not providing your Social Security number to your clients, you should think about the tax implications before making a decision. Self-employment income is subject to Self-Employment Contributions Act (SECA) taxes. The 2011 SECA tax is 13.3 percent, down from 15.3 percent in previous years. Of that 13.3 percent, half of it is tax deductible. These amounts are far less than the 28 percent backup withholding requirement your client will withhold from you pay when you refuse to give them your Social Security number.
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