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Tenant is asking me to fill out a W9 form

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  • Tenant is asking me to fill out a W9 form

    So my tenant is asking me to complete a W9 form. As the commercial property is under my personal name (not an LLC), that involves me divulging my SSN to my tenant. Is there a way around this?

  • #2
    The purpose of a Form W-9 is to provide your correct TIN to a person who is required to file an information return with the IRS. As far as I know, a tenant has no such requirement. Unless one of the CPAs or experienced owners of rental properties knows otherwise, I would tell them to pound sand.

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    • #3
      You could not give them your W-9 information but you would be subject to backup withholding.  Since you're renting a commercial space you're likely renting to a business.  The business owner, your tenant, has a requirement to send you a 1099 for the rents they pay you.

      If you don't give your SSN then they are technically required to withhold 24% of the rent and pay it to the IRS.  https://www.irs.gov/taxtopics/tc307

      You could get an EIN for this activity to avoid giving out your SSN.  https://sa.www4.irs.gov/modiein/individual/index.jsp

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      • #4
        Give EIN not SSN

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        • #5
          I was told by my CPA that I needed to issue a 1099 for rent paid to my previous landlord because she was not incorporated.  I don’t recall whether I requested a W9 or just the EIN/TIN. I currently rent through a corporation, so a1099 is no longer required. I would provide your EIN/TIN not SSN.

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          • #6
            Getting an EIN only takes about 5 minutes online.

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            • #7




              The purpose of a Form W-9 is to provide your correct TIN to a person who is required to file an information return with the IRS. As far as I know, a tenant has no such requirement. Unless one of the CPAs or experienced owners of rental properties knows otherwise, I would tell them to pound sand.
              Click to expand...


              Exactly right. If your tenant is an unincorporated business, you will need to provide your TIN. Before doing so, I would apply for an EIN, though. Otherwise, tell your tenant that either s/he or the CPA is being a little overly ambitious. Not a terrible thing (I wish more CPAs would be) but appears one of them is not quite up to speed.

              EDIT: Businesses are not required to send 1099s to:

              • incorporated entities to whom they do not pay > $600 in a calendar year or

              • any recipient that they do not pay in the course of their business (i.e. as deductible business expenses)


              There is an exception - if the payee (recipient of payments) is a law firm, in which case, payers are required to send a 1099 for total payments > $600 in a calendar year (even if the law firm is incorporated) and the payment is a business expense (i.e. not for personal estate planning, etc.)

              I dashed off the first response very rapidly - thanks to David for bringing my error immediately to my attention!
              Financial planning, investment management and CPA services for medical professionals | 270-247-6087

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              • #8
                @jfoxcpacfp - I think we're getting the incorporated vs unincorporated requirement backwards.

                The issue is whether the recipient of the payments is a corporation, not the payer of the payments.  The payer requests a W-9 from the payee to get their name, address, SSN/EIN and entity type.

                If the payee indicates they're a corporation the payer is relieved of their responsibility to issue a 1099.

                In this case the tenant could be a corporation and still be required to send a 1099 to benign_user because benign_user is NOT a corporation.

                Edit to add: The tenant is correct in requesting the W-9.

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                • #9




                  @jfoxcpacfp – I think we’re getting the incorporated vs unincorporated requirement backwards.

                  The issue is whether the recipient of the payments is a corporation, not the payer of the payments.  The payer requests a W-9 from the payee to get their name, address, SSN/EIN and entity type.

                  If the payee indicates they’re a corporation the payer is relieved of their responsibility to issue a 1099.

                  In this case the tenant could be a corporation and still be required to send a 1099 to benign_user because benign_user is NOT a corporation.
                  Click to expand...


                  You are exactly right - I got that backwards (a 2nd time, lol). Thanks!
                  Financial planning, investment management and CPA services for medical professionals | 270-247-6087

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                  • #10




                    Getting an EIN only takes about 5 minutes online.
                    Click to expand...


                    It really is a shockingly easy process.

                    Almost a little anti-climactic I thought.

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                    • #11
                      As a related aside for other small landlords out there, this discussion also demonstrates why you want the contractors for your properties to be corporations if the job is big. Otherwise you need to collect a W9 from them and provide a 1099 for payments >$600 a year.

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                      • #12
                        I agree with Larry Ragman but with one distinction - you should always get a W-9 from someone you might need to issue a 1099 to.  Getting their EIN/SSN up front protects you from a backup withholding assessment by the IRS and helps you do your due diligence regarding the issuance of a 1099.

                        The trigger for a backup withholding assessment by the IRS is failing to obtain the EIN/SSN from the payee.  Backup withholding isn't widely known but it's a real statute (§3406) and the IRS does assess it.

                        If you failed to get the EIN/SSN and the IRS discovers it during the course of an audit they could technically charge you 24% of all the "reportable payments" you made but didn't have the W-9 information for the payees.  I've seen the IRS make a $100,000 backup withholding assessment.

                         

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                        • #13
                          Thanks everyone for helping me on this thread. I just gave the tenant a W9 with the EID number instead of the SSN.

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