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Tenant is asking me to fill out a W9 form

Home Real Estate Investing Tenant is asking me to fill out a W9 form

  • Avatar benign_user 
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    Status: Physician
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    Joined: 01/14/2016

    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?

    #243460 Reply
    Avatar spiritrider 
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    Status: Small Business Owner
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    Joined: 02/01/2016

    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.

    #243474 Reply
    Avatar DavidGlennCPA 
    Participant
    Status: Accountant
    Posts: 57
    Joined: 06/12/2019

    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

    David Glenn, CPA | Glenn Advisory
    https://www.taxcpafordoctors.com | (808) 321-5664

    #243477 Reply
    Liked by Infinity
    Avatar DCdoc 
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    Status: Physician
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    Joined: 06/14/2016
    Splash Refinancing Bonus

    Give EIN not SSN

    #243482 Reply
    Avatar PainShrink 
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    Status: Other Professional, Small Business Owner
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    Joined: 09/30/2018

    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.

    #243494 Reply
    Avatar StateOfMyHead 
    Participant
    Status: Advanced Practice Provider
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    Joined: 01/01/2019

    Getting an EIN only takes about 5 minutes online.

    #243495 Reply
    Liked by MPMD
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8113
    Joined: 01/09/2016

    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!

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #243514 Reply
    Avatar DavidGlennCPA 
    Participant
    Status: Accountant
    Posts: 57
    Joined: 06/12/2019

    @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.

    David Glenn, CPA | Glenn Advisory
    https://www.taxcpafordoctors.com | (808) 321-5664

    #243519 Reply
    jfoxcpacfp jfoxcpacfp 
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    Status: Financial Advisor, Accountant, Small Business Owner
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    Joined: 01/09/2016

    @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!

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #243521 Reply
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2483
    Joined: 05/01/2017

    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.

    #243526 Reply
    Avatar Larry Ragman 
    Participant
    Status: Other Professional
    Posts: 614
    Joined: 08/30/2018

    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.

    #243533 Reply
    Avatar DavidGlennCPA 
    Participant
    Status: Accountant
    Posts: 57
    Joined: 06/12/2019

    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.

     

    David Glenn, CPA | Glenn Advisory
    https://www.taxcpafordoctors.com | (808) 321-5664

    #243535 Reply
    Avatar benign_user 
    Participant
    Status: Physician
    Posts: 167
    Joined: 01/14/2016

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

    #243974 Reply

Reply To: Tenant is asking me to fill out a W9 form

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