About Form W-9, Request for Taxpayer Identification Number and Certification Internal Revenue Service

In other words, in almost every case you will enter your personal Social Security Number, not the EIN of the LLC. If you’re a sole proprietor, enter your Social Security number in Part I even if you have an EIN. For Forms W-9 that are not required to be signed, the electronic system need not provide for an electronic signature or a perjury statement. Withholding and reporting under sections 1446(a) and (f) starting in 2023. Janet Berry-Johnson, CPA, is a freelance writer with over a decade of experience working on both the tax and audit sides of an bookkeeping and payroll services accounting firm. She’s passionate about helping people make sense of complicated tax and accounting topics.

• Send any taxes withheld from their payments to the Internal Revenue Service.
• Information Returns can be filed electronically, however, you must have software that can produce the file in the proper format as required by Publication 1220.
• In that case, you may rely on the Form W-9 for purposes of obtaining the payee’s TIN, but you must treat the payee as non-exempt.
• This change provides the flow-through entity with information regarding the status of its indirect foreign partners, owners, or beneficiaries, so that it can satisfy any applicable reporting requirements.
• You’ll need to fill out a W-9 form when a business or individual (like a client or financial institution) requests your taxpayer identification information.
• Withholding and reporting under sections 1446(a) and (f) starting in 2023.

Tax Planning

Information Returns can be filed electronically, however, you must have software that can produce the file in the proper format as required by Publication 1220. A payee’s agent can be an investment advisor (corporation, partnership, or individual) or an introducing broker. fedex w9 An investment advisor must be registered with the Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. The introducing broker is a broker-dealer that is regulated by the SEC and the Financial Industry Regulatory Authority (FINRA), and that is not a payor. Except for a broker who acts as a payee’s agent for “readily tradable instruments,” the advisor or broker must show in writing to the payor that the payee authorized the advisor or broker to transmit the Form W-9 to the payor. Advise foreign persons to use the appropriateForm W-8 or Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual.

Backup withholding and nonresident alien withholding

If you’re not sure what type of business entity you should select, the IRS has provided a summary table for guidance as part of the Form W-9’s instructions. Sign up to get the latest tax tips, information on personal finance and other key resources sent straight to your email. Just make sure your information is accurate, as the payer will use it to report income paid to you. The most recent version of the W-9 form is easier to use because the designation for different types of businesses is easier to figure out. It still offers some challenges, however, and you’ll want to take care to complete it correctly. If you are an employer that files Form W-2, Wage and Tax Statement, the reduced threshold also applies.

• If you cannot determine whether the payee is a foreign person or a U.S. person, the presumption rules require you to treat the payee as a non-exempt U.S. person and deduct backup withholding.
• Let’s say you paid your independent contractor $600 or more during the year and you either didn’t request a W-9 from them or, despite your request, they failed to complete it or provide you with their SSN or EIN.
• The introducing broker is a broker-dealer that is regulated by the SEC and the Financial Industry Regulatory Authority (FINRA), and that is not a payor.
• Employers should go to Social Security Administration’s Business Services Online for further information on electronically filing their W-2s.
• A business is required to document all attempts to obtain W-9 information from the vendor (a minimum of three attempts).
• Last, many of the same items are collected across both forms.

Don’t forget to sign the form!

Independent personal services (a term commonly used in tax treaties) are personal services performed by an independent nonresident alien contractor as contrasted with those performed by an employee. Payments made to these individuals may be subject to 30% withholding (nonresident alien withholding rate) unless a lower rate is provided by tax treaty or the law. If you cannot determine whether the payee is a foreign person or a U.S. person, the presumption rules require you to treat the payee as a non-exempt U.S. person and deduct backup withholding. Source Income of Foreign Persons, must be filed if the payer is required to file Form 1042-S. A Form 1042-S is required even if the tax was not actually withheld. For more information on withholding on payments to nonresident aliens, see NRA Withholding, Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, and Publication 901, U.S.

Line 3: Federal Tax Classification of Your Business

Then you must check the box corresponding to your LLC’s tax status. If your LLC has not filed a request to be taxed as a C corporation or an S corporation, the LLC is taxed as a partnership. Check the first box if your business is a sole proprietorship or a single-member LLC. A sole proprietor business operates under the owner’s Social Security number and has not registered with the state as any other type of business. A single-member LLC is an LLC with just one owner and it’s taxed as a sole proprietorship. Beginning with Tax Year 2020, you must use Form 1099-NEC, Nonemployee Compensation, to report payments of nonemployee compensation (NEC) previously reported in box 7 on Form 1099-MISC.

Don’t report on Form 945 withholding that is required to be reported what are retained earnings electronically on Form 1042, Annual Withholding Tax Return for U.S. Use Form 1042 to report tax withheld under chapter 3 on certain income of foreign persons, including nonresident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts. Also use Form 1042 to report tax withheld under chapter 4 on withholdable payments. For chapter 4 purposes, Form W-9 is used to withhold on payments to foreign financial institutions (FFI) and non-financial foreign entities (NFFE) if they don’t report all specified U.S. account holders. If an account holder fails to provide its TIN, then the withholding rate is 30%.

• The portion of the section 1446(a) regulations relating to withholding and reporting on distributions made by PTPs was expanded to allow certain additional entities to act as nominees for PTP distributions.
• Most individuals and business types are not exempt from backup withholding, but your business might be exempt from backup withholding for certain payments if it’s a corporation.
• We believe everyone should be able to make financial decisions with confidence.
• If you are supplier #45 in their records, they may ask you to make note of your supplier number on this line.
• If the recipient wants to stop backup withholding, they need to correct the reason they’re subject to backup withholding with the IRS.
• Even if the payee gives you an awaiting-TIN certificate, you must backup withhold on reportable interest and dividend payments if the payee does not certify, under penalties of perjury, that the payee is not subject to backup withholding.
• If backup withholding is required, this will need to be noted on the W-9, to properly inform the entity receiving the information of the need to withhold accordingly.

We also added guidance that provides clarity for disregarded entities completing lines 1 and 2. For proper processing, information for disregarded entities is reported as the owner’s name on line 1, and the disregarded entity’s name is entered on line 2. If the recipient wants to stop backup withholding, they need to correct the reason they’re subject to backup withholding with the IRS. This might involve providing a correct tax identification number, filing a missing tax return, or paying the amount due on underreported taxable income. Form W-9 is an IRS tax form that requests information for an individual defined as a U.S. citizen or a person defined as a resident alien. The information is used to fill out Form 1099 and is used for independent contractors, freelancers, or unrelated vendors, but not employees.

Just keep a copy of the completed form on hand, and it will be ready to go in seconds if a new client asks for one.For more details, read the guide to filling out Form W-9. Businesses request W-9 forms from freelancers or contractors to ensure they have the correct information to prepare 1099-NEC forms. Two commonly used forms for tax purposes are Form W-9 and Form W-4.