I will be getting paid $150 for a one time thing, and i will be asked to fill out a W-9.

[fearthezagh]

What will happen to my information and how will the person asking me for the W9 use it? Who finds out that I received payment(IRS, people who claim me as dependents, etc)? Will i get any letters from the employer or IRS? Will i have to fill out anything for the IRS?

[Hal_Al · Accepted solution]

Businesses that pay people for services (work) are required to issue a form 1099-Misc if they pay that person more than $600 in a calendar year. Many will issue the 1099-misc, even when they pay less than $600 and are allowed (but not required) to do so. The 1099-Misc will  go to you, with a copy to the IRS. The W-9 does not go to the IRS.

YOU are required to report all your income, regardless of the issuance of IRS forms. Although it may be news to you that you “have a business” (and most of the other people who get their first 1099-MISC); The IRS considers anything in box 7 of 1099-MISC to be self employment income. Enter the 1099-Misc income, at Other Common income / income from a 1099-MISC . TurboTax (TT) will complete Schedule C or C-EZ for you and allow you to deduct any expenses associated with this income. You'll also have to pay self employment tax (social security & Medicare) on any profits greater than $400. These types of payments are frequently done this way. Your "employer" is not the only one. You are expected to keeps records on your income and expenses. 

[SweetieJean]

"people who claim me as dependents"  Have you ever filed your own tax return?