Form W-9: What is it and how is it used?

## **What is form W-9?**

A W-9 form is a document created by the Internal Revenue Service (IRS) in the United States. It serves the purpose of verifying an individual's personal information like their name, address, and taxpayer identification number (TIN). This form is typically required when someone is being hired for work or is involved in activities that generate income, such as freelance work or contract jobs. It's used to ensure that the IRS can accurately track and report the income of the individual. The request for this information can apply to both U.S. citizens and individuals who are considered resident aliens according to tax regulations.

A W-9 form is also known as a Request for Taxpayer Identification Number and Certification form.

### **Understanding form W-9**

A W-9 form is a formal document used to request specific information, solely aiming to confirm a person's taxpayer identification number (TIN). This request is essential for employers or entities mandated to report financial details to the IRS, like Form 1099. Acquiring the accurate TIN is crucial for reporting earnings or losses that could impact an individual's federal tax return or taxable income. Typically, an individual's Social Security Number (SSN) serves as their TIN.

It's important to note that a W-9 differs from a W-4 form, which employees usually provide to their direct employers. Unlike the W-4, the W-9 doesn't involve the automatic withholding of taxes.

In case taxes are owed based on the information provided in the W-9, it's the responsibility of the person listed as the TIN holder on the form to handle those taxes. However, if the taxpayer is subject to backup withholding, this needs to be indicated on the W-9. This informs the entity receiving the information that they must withhold a certain amount in accordance with tax regulations.

### **Purpose of form W-9**

The primary purpose of a W-9 form is to collect essential tax information from a vendor. In situations where a company pays an individual or another entity more than $600 within a year for their services, it becomes necessary for the company to submit an information return. To ensure the accuracy of this returned information, the W-9 form serves as a means to directly gather all the required details from the vendor.

Although certain details might be publicly accessible, the W-9 form safeguards the company acquiring the information by obliging the other party to sign the completed form. This signature certifies:

* The tax identification number (TIN) being provided is correct.
* The other party is not subject to backup withholding.
* The other party is claiming exemption from backup withholding.
* The FATCA code used by the vendor (and the vendor's exemption status)

Businesses use the name, address, Social Security number, or tax identification number that contractors supply on the W-9 form to accurately complete the required information return. Neither the sender nor the recipient is required to send a copy of the form to the IRS. Furthermore, the business requesting the tax-related information must responsibly retain copies of the completed W-9 forms for their records.

### **Uses of Form W-9**

The Form W-9 serves as a crucial tool for preparing various informational reports to be submitted to the IRS. Its most common application arises when an independent contractor completes work for a company and receives payments. In cases where this contractor earns more than $600 within a calendar year, they must be provided with a Form 1099-MISC and are responsible for reporting their own taxes.

However, the scope of the Form W-9's purpose goes beyond this particular scenario. Financial institutions or banks rely on the information obtained through the W-9 form to accurately generate Form 1099-INT, 1099-DIV, or 1099-B, which are crucial for tax reporting. Moreover, taxpayers might also be required to furnish a Form W-9 in situations like debt cancellation, dealing with student loans, or engaging in real estate transactions. In these cases, the form acts as a means to provide the necessary taxpayer information essential for proper reporting and compliance with tax regulations.

## **Information required on a W-9 form with Hedonova**

If you are a *[U.S. person](https://www.irs.gov/individuals/international-taxpayers/classification-of-taxpayers-for-us-tax-purposes)*, you need to file a Form W-9 with Hedonova (all others should file a Form W-8BEN or W-8BEN-E).

If you do not complete a W-9 with a valid taxpayer identification number — your Social Security or *[Employer Identification Number](https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers?ld=NSGoogle)* — we are required to withhold and remit taxes from your withdrawals to the U.S. Internal Revenue Service at a pre-set tax rate.

To fulfill the W-9 requirements, the process is carried out within the Tax Information section of your account settings:

### **1. Tax residence**

Confirm that you are a U.S. taxpayer.

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Form%20W-9%20What%20is%20it%20and%20how%20is%20it%20used/1695113700823.webp)

Provide your tax address information.

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Form%20W-9%20What%20is%20it%20and%20how%20is%20it%20used/1695113768826.webp)

### **2. Taxpayer identification**

Enter your legal name, date of birth and country of citizenship if you are filing as an individual, or your country of incorporation if you are filing as a corporation or partnership

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Form%20W-9%20What%20is%20it%20and%20how%20is%20it%20used/1695113815932.webp)

Select your federal tax classification from the drop-down box

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Form%20W-9%20What%20is%20it%20and%20how%20is%20it%20used/1695113855978.webp)

### **3. Tax identification number**

Provide your Tax taxpayer identification number — your Social Security or *[Employer Identification Number](https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers?ld=NSGoogle)*.

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Form%20W-9%20What%20is%20it%20and%20how%20is%20it%20used/1695113896932.webp)

Read the Tax Certification, which includes reviewing the information you have provided, shown in the text box. According to U.S. tax regulations, it is mandatory to inform Hedonova if any changes occur on your W-9 subsequent to your investment initiation.

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Form%20W-9%20What%20is%20it%20and%20how%20is%20it%20used/1695113943745.webp)

Electronically sign with your legal name (the date will always default to the date you sign).

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Form%20W-9%20What%20is%20it%20and%20how%20is%20it%20used/1695114023302.webp)

Check the confirmation box situated at the bottom of the page.

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Form%20W-9%20What%20is%20it%20and%20how%20is%20it%20used/1695114059934.webp)

**Note:** Once you complete and submit your information in the Tax declaration section, you’ll see it completed in the Documents section. If you haven’t done so yet, it will not be there.

The *[steps](https://www.irs.gov/pub/irs-pdf/fw9.pdf)* for completing the digital form W-9 align with those for the paper Form W-9 provided by the IRS. If you encounter inquiries regarding your filing status or TIN, we advise seeking assistance from a local accountant or tax advisor. Their expertise can offer valuable guidance tailored to your specific situation.

For any issues encountered during W-9 certification, please contact Hedonova Support or reach out via email at *[hello@hedonova.io](mailto:hello@hedonova.io)*. 

## **Frequently Asked Questions**

### What is Form W-9, and why is it important?

Form W-9 is used to furnish tax information from one party to another. It's a way of formally gathering personal information, having a standard method of transmitting information, and requiring the furnisher to certify that the information they are providing is correct. Form W-9 is then used to issue specific tax statements to non-employees that earned certain types of payment throughout the year.

### Who needs to complete Form W-9?

U.S. individuals, including investors, should complete the Form W-9. This form aids in accurately reporting financial activities involving U.S. residents.

If you are a *[Non-U.S. Person](https://www.irs.gov/individuals/international-taxpayers/classification-of-taxpayers-for-us-tax-purposes)*, you should complete Form W-8BEN/W-8BEN-E.

### What happens if I don't complete the W-9 form?

Failure to complete the W-9 form as proof of your U.S. residency status could result in Hedonova withholding up to 30% of your future investment profits. This withheld amount would then be remitted as a withholding tax to the IRS.

### What information is needed on the Form W-9?

You'll be asked to provide your legal name, business name (if applicable), Taxpayer Identification Number (Social Security or Employer Identification Number), and address. This information ensures proper tax reporting and adherence to legal requirements.

### When should I submit the completed Form W-9?

It's best to provide the completed Form W-9 to us before any investment activities take place. Ensuring that this form is submitted in a timely manner helps streamline our financial processes.

### Can I modify my Form W-9 if my information changes?

Absolutely. If there are changes to your information (e.g., name change, SSN update), please notify us within 30 days so that we can ensure accurate and up-to-date records.

### Do I need to complete a W-9 even if I only make a small amount of money on Hedonova?

The Internal Revenue Service requires us to collect Tax Identification Numbers (SSN or EIN) for all U.S. taxpayers who withdraw funds from Hedonova, no matter how much they withdraw. If we do not have your valid SSN or EIN on file, we are required to withhold taxes from your withdrawals and send them to the IRS.

### What happens if I make a mistake when I enter my Form W-9 information?

If the Internal Revenue Service determines an error in your SSN or EIN, we will notify you and ask you to correct it.

If you do not correct the information on your W-9 within 30 days, you may be subject to income tax withholding. The IRS requires us to withhold and submit income taxes on your profits if we do not have a valid SSN or EIN on file for you.

### How do you use the information that I provide on Form W-9?

We only use the form to confirm that you are a U.S. Person and that we are not required to withhold taxes from your earnings for the IRS. This includes providing this information to the IRS if they request it.

A W-9 form is a document created by the Internal Revenue Service (IRS) in the United States. It serves the purpose of verifying an individual's personal information like their name, address, and taxpayer identification number (TIN).

Form W-9: What is it and how is it used?

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