How to use form W-9 exempt payee code

Some businesses are exempt from backup withholding. If it is so, they should enter the appropriate code on Request for Taxpayer Identification number and Certification. This will inform the payee that backup withholding can’t be applied.

Exemption codes. W-9 line 4

When you fill W-9 line 4, you can use certain exemption codes to state that you’re not a subject to backup withholding. It can be:

  • 5 – corporation;
  • 8 – real estate company;
  • 11- financial institution etc.

You can find a full list of 13 codes in the form instructions section.

What payments are exempt from backup withholding?

A 24% withholding tax is generally not applied to:

  • dividends and interests;
  • barter exchange transactions;
  • direct sales over $5000;
  • payments of $600 and more for services;
  • broker transactions.

If you’re not an exempt payee, you’ll mostly become a subject to backup withholding in case you’ve failed to provide your TIN or it’s incorrect. Use our online PDF filler to make sure you submit federal W-9 form in time and all information on it is correct. You’ll be able to enter all the data electronically and certify the document with digital signature.