Form W-9, (Request for Taxpayer Identification Number and Certification) are for US citizens and businesses that need to give their taxpayer identification number (TIN) for entities that must report income to the IRS.
It’s for making sure that income is reported properly and that backup withholding isn’t an issue, backup withholding occurs when the IRS doesn’t have the proper TIN info sent out along with their 24% tax.
This form is not submitted to the IRS, but is sent to the client, bank, landlord, etc. that requested the form.
Who Needs to File Form W-9?
If you work with others and need to file taxes with the IRS, you might need to fill out Form W-9. Examples may include:
- Freelancers and independent contractors
- Landlords who earn income from renting properties
- Companies or organizations that are receiving payments that need to be reported
- Partnerships, trusts, and estates
Similarly, banks and brokerages may ask you to fill out a W-9 for interest-earning accounts. This is often a requirement for IRS compliance as well.
How Do You Complete Form W-9?
Completing Form W-9 is easy. Just do the following:
- Write how your name appears on your tax return.
- If there’s a business name, list it. (e.g. LLC, DBA)
- Choose your tax classification: individual/sole proprietor, C-corporation, S-corporation, partnership, trust/estate, or LLC.
- Write your TIN:
- If it’s an individual use SSN
- For a business use an EIN
- Certify under penalty of perjury that your tax information is correct.
- Before sending the information to the requestor, sign the form and put the date on it.
So for an example, a freelance graphic designer working under their name would be a sole proprietor and if their SSN is 123-45-6789, they would fill out the form and submit it to the client they are working for before they receive the payment.
Common Mistakes to Avoid with Form W-9
W-9 forms including mistakes can result in delays or errors that may lead to IRS penalties. Common mistakes include issues or mistakes with:
- Leaving TIN blank or writing the incorrect number
- Not signing or dating the form
- Picking the wrong tax classification
- Not submitting amended forms once information changes (for example: a name change)
ProTip: Always verify your TIN as well as the entity type you have before submitting to avoid potential backup withholding.
Filing Deadlines and Penalties
- Deadline: Submit the W-9 when requested by the payer, ideally before the first payment is issued.
- Penalties for non-compliance:
- $50 for each incorrect or missing TIN
- Backup withholding of 24% of reportable payments if the TIN is not provided
- Potential criminal fines for intentional misreporting
| Scenario | Action Required | Penalty |
| Missing TIN | Provide correct W-9 | 24% backup withholding |
| Incorrect TIN | Submit updated W-9 | $50 per incorrect TIN |
| Intentional falsification | Correct and certify | Possible criminal fines |
How Does Form W-9 Relate to Backup Withholding and FATCA?
Backup withholding applies when payers and payees do not have a correct TIN on record. In these situations, payers need to withhold 24% of any payment that would need to get sent to the IRS, until a correct TIN has been provided.
With respect to foreign accounts, the W-9 facilitates compliance with FATCA. Additional reporting and withholding requirements can be avoided when U.S. persons and particular foreign entities certify their status.
Where Can I Find Official IRS Resources for Form W-9?
- Form W-9 PDF & Instructions
- IRS Publication 515: Withholding of Tax on Nonresident Aliens and Foreign Entities
Always use official IRS forms to ensure your submission is compliant and up to date.
If you want to be completely certain your W-9 and TIN as well as tax status are correct, reach out to Dimov Tax for professional guidance – before penalty payments or withholding become an issue. Our professionals are ready to provide expert support.
FAQs
Do I need to submit Form W-9 to the IRS?
No, you do not submit Form W-9 directly to the IRS. The form is intended for the entity that is paying you, such as a client, financial institution, or landlord, so they can accurately report payments made to you.
How often should I update my W-9?
You should submit a new W-9 whenever there are changes to your personal or business information that affect your tax reporting. Updating your W-9 promptly ensures that the payer has accurate information to report to the IRS and helps prevent issues like backup withholding or delayed payments.
Can I submit a W-9 electronically?
Yes, most payers accept electronic submission of Form W-9. This can be done through secure email, online portals, or digital signature platforms. Electronic submission is often faster, reduces paperwork, and ensures that your information is transmitted safely to the payer. However, always confirm the payer’s preferred method before sending the form.
What happens if I refuse to provide a W-9?
If you refuse to provide a completed W-9 to a payer, they are legally required to withhold backup withholding at a rate of 24% from any reportable payments made to you. This withholding continues until you provide a valid and correctly completed W-9. Failing to provide the form can also delay payments and may create additional administrative burdens for both you and the payer.
Is W-9 required for all income?
No. Form W-9 is usually needed only for reportable payments like nonemployee compensation, rent, interest, dividends, and certain business transactions. Payments like W-2 wages or personal gifts don’t require a W-9. It ensures the payer reports income correctly and avoids backup withholding.