When a person gets a notification to send back completed W-9 form mostly it turns into panic: why should I give the bank or whatever my SSN or TIN, EIN, is it safe and how will it influence on taxes? No panic. It’s quite typical situation. You have to send your bank or company/clients this form only once or just give a SSN (TIN/EIN) by phone or by yourself. So download file, complete it and return to one who required for it. Another way a person is becoming a subject to backup withholding. When it will be approved?
If your company has asked for this form so it is usually approved in several days if it was sent after 17 pm (NY). But in the month ending it can take a bit more. If your bank requested to issue a blank Request for TIN form you’d better go there by yourself to approve the tax information faster or do it on phone and then don’t forget to check if they get your correct information. The key word is correct!
If something goes wrong
Companies need to know about your TIN/EIN because they are required to withhold % for the IRS. They also need your IRS consent (W-9, W-4, W-2 etc.). It is called the backup withholding tax and is a standard in the USA. But this is a W-4.
If you’re freelancer, vendor and so on you take your own risks. Using the 9th form a person takes responsibility to pay taxes on his own. You can check if you’re a subject to backup withholding(a person should be notified by the IRS). They will send you at least 4 times a special notification that they want to withhold 24% tax.
Why form W-9 is applied for?
Not only bank or the IRS can request to complete Request for TIN blank which is known as W-9. Your clients, partners, company or entity which pay you income or freelance payments usually need your SSN (TIN or EIN) for different accounting. Most of the times they just use this information to make 1099 MISC in January. Clients need to report the payments they make in their end-of-year accounting. That’s why they request your W-9. It’s a necessary thing If you work as an independent contractor or an individual business owner.
Application for reinstatement form using TIN W-9
If you or your company don’t have to withhold tax (you’re not resident and so on) so it will get in Exempt Organizations Select Check. To continue its tax-exempt status make an application for reinstatement form using TIN W-9.
The backup withholding tax (W-9 helps to avoid it) is 24% in 2018-2025 period. A person doesn’t need to pay this completing W-9. One should account it and issue the 1099 blank. But if your TIN is invalid or you give not correct name the IRS starts to request the backup withholding. To stop this a person needs to issue accurate information in W-9 and send it to the IRS.