What does Form W-9 help the payee avoid?

What does Form W-9 help the payee avoid?

• A. Identity theft
• B. Income tax withholding
• C. Backup withholding
• D. Reporting payments to the IRS

Answer: (C)

Form W-9 is a request for taxpayer identification number and certification, which is typically used by businesses to collect information from independent contractors or vendors. By providing accurate information on Form W-9, the payee helps the payer avoid backup withholding. Backup withholding is a tax withholding that can occur if the payee does not provide a correct taxpayer identification number (TIN) or if the Internal Revenue Service (IRS) notifies the payer that the payee is subject to withholding due to underreporting of interest or dividends. When the payee submits a completed W-9, it certifies that the information provided is correct and that they are not subject to backup withholding. If the payee fails to provide this information, the payer may be required to withhold a specified percentage of the payments made to the payee and remit that amount to the IRS. Therefore, the primary goal of submitting Form W-9 is to ensure that the payee avoids the complications and potential loss of income associated with backup withholding.

Form W-9 is a request for taxpayer identification number and certification, which is typically used by businesses to collect information from independent contractors or vendors. By providing accurate information on Form W-9, the payee helps the payer avoid backup withholding. Backup withholding is a tax withholding that can occur if the payee does not provide a correct taxpayer identification number (TIN) or if the Internal Revenue Service (IRS) notifies the payer that the payee is subject to withholding due to underreporting of interest or dividends.

When the payee submits a completed W-9, it certifies that the information provided is correct and that they are not subject to backup withholding. If the payee fails to provide this information, the payer may be required to withhold a specified percentage of the payments made to the payee and remit that amount to the IRS. Therefore, the primary goal of submitting Form W-9 is to ensure that the payee avoids the complications and potential loss of income associated with backup withholding.