What Happens If I Don’t Submit a W9 Form?
A W9 form is used by enterprises and individuals to report non-employee income to the IRS. If you don’t submit a W9 Form, you may need to manage several consequences as outlined below:
- Backup Withholding Tax
If you fail to present a completed W9, the payer is required by the IRS to withhold 24% of the payments you generated. This backup withholding serves as a precaution in collecting taxes. - Delayed Payments
Many payers require a completed W9 form before processing payments. It could also result in payment delays. - IRS Reporting Issues
Without a W9, the payer may not be able to correctly report your income to the IRS. This can lead to issues in the tax filings alongside potential audits. - Missed Tax Benefits
Presenting all available information on the W9 makes sure that any applicable tax benefits are received. - Impact on Creditworthiness
Unresolved tax issues resulting from such W9 form submission failures can also affect your financial reputation as well as credit score or borrowing capacity. - State-Level Implications
It is possible for some states to have necessities linked to the W9 form, and compliance-related issues could lead to additional state-level withholding or penalties.
When Is W9 Form Required?
You will generally be asked to submit a W9 if:
- You are an independent contractor or freelancer.
- You generate income via interest, dividends or real estate transactions.
- A business pays you $600 or more within the tax year.
Avoid Complications in W9
In order to prevent problems related to W9 submissions:
- Submit Promptly: Fill out and return the W9 form as soon as requested.
- Keep Your Information Updated: If your address, name, or Taxpayer Identification Number (TIN) changes, provide an updated W9.
- Consult Professionals: Tax professionals can present full compliance with the requirements.