When Does a Landlord Need a W-9 Form From a Tenant?
Explore the specific financial circumstances that obligate a landlord to request a tenant's taxpayer information with a Form W-9 for tax reporting.
The Internal Revenue Service (IRS) Form W-9 is used to request a taxpayer’s identifying information. Businesses that must file information returns with the IRS use this form to obtain the correct name, address, and Taxpayer Identification Number (TIN) of a person they have paid. This information is necessary for the payer to accurately report payments. The form also serves as a certification that the TIN provided is correct and the individual is not subject to backup withholding.
When a Landlord Needs a W-9 from a Tenant
A landlord needs a Form W-9 from a tenant only in specific situations where the landlord makes reportable payments to the tenant. One scenario involves security deposits. If state or local law requires a landlord to pay interest on a tenant’s security deposit, and the payment is $10 or more in a year, the landlord must report this interest income to the IRS. To report the payment, the landlord needs the tenant’s TIN, which is collected using a W-9.
Another situation occurs when a landlord pays a tenant for work. If a tenant provides services like maintenance, landscaping, or cleaning, and payments total $600 or more in a year, the landlord must report this as nonemployee compensation. The landlord needs the tenant’s W-9 to gather the information required to file the correct tax return.
In both instances, the principle is the same: the landlord made a payment to the tenant that the IRS considers reportable income. The W-9 is the mechanism for the landlord to collect the tenant’s name, address, and TIN to fulfill their tax reporting obligations. Without this form, the landlord cannot accurately file the required tax documents.
Information Required on Form W-9
When completing a Form W-9, a tenant must provide their name as it appears on their tax return and their current mailing address. If the tenant operates as a business, such as a sole proprietorship or a single-member LLC, they must also include the business name on the designated line.
The form also requires the Taxpayer Identification Number (TIN). For an individual tenant, this is their Social Security Number (SSN). If the tenant is a business entity, such as a multi-member LLC or corporation, they must provide their Employer Identification Number (EIN).
The tenant must also check a box to indicate their federal tax classification, such as individual/sole proprietor, C Corporation, S Corporation, or Partnership. For most individual tenants, selecting “Individual/sole proprietor or single-member LLC” is the correct choice. The tenant must then sign and date the form, certifying the accuracy of all information provided.
Using the Tenant’s W-9 Information
The information from a completed W-9 is not sent to the IRS directly. Instead, the landlord uses it to prepare other tax forms that report the payments. If the landlord paid $10 or more in security deposit interest, they use the information to complete Form 1099-INT, Interest Income. For payments of $600 or more for services, the landlord prepares Form 1099-NEC, Nonemployee Compensation.
The landlord must send a copy of the appropriate 1099 form to the tenant and file it with the IRS. The deadline to provide the tenant with a copy of either Form 1099-INT or 1099-NEC is January 31 of the following year. The IRS filing deadline for Form 1099-NEC is also January 31. For Form 1099-INT, the IRS deadline is February 28 for paper filing and March 31 for electronic filing.
Failing to obtain a W-9 with a correct TIN can lead to consequences for the landlord. If the landlord cannot provide a correct TIN on the 1099 form, they may face penalties. In some situations where a correct TIN is not provided, the landlord must implement backup withholding. This requires the landlord to withhold a flat 24% from future reportable payments to the tenant and send those funds to the IRS.