What is Form W-9?

How it works

A US payer collects Form W-9 from any US payee they will report to the IRS — independent contractor, vendor, real-estate seller, broker client, gig worker. The W-9 confirms two things:

1. Status: the payee is a US person (US citizen, US resident alien, US partnership, US corporation, US LLC, US estate or trust).
2. TIN: the correct taxpayer identification number — SSN for US individuals, EIN for entities.

If the payee fails to return a W-9, or returns it with an incorrect TIN, the payer must apply 24% backup withholding on payments until a valid W-9 is on file. The IRS pursues the payer, not the payee, for missed deposits.

W-9 is never sent to the IRS — it stays in the payer's files. The payer uses the certified TIN when filing 1099-NEC, 1099-MISC, 1099-INT, 1099-DIV, 1099-B, 1099-K, 1099-S etc. at year end.

US persons abroad — citizens, green card holders, even US-LLCs owned by US persons — still file W-9, not W-8. Citizenship and entity status, not residence, drive the choice.

Who uses W-9 vs. W-8

The single-member LLC line is where most errors happen. A disregarded LLC takes the tax personality of its owner: US owner → W-9; non-US owner → W-8.

Examples

• US citizen freelancer in Lisbon. US citizen, Portuguese resident, paid by a US client. Files W-9 (US citizenship is decisive). The client issues a 1099-NEC at year end. The freelancer reports on Form 1040 worldwide income and uses the foreign tax credit or FEIE for relief on the Portuguese tax.
• French founder's Wyoming LLC. Single-member, disregarded. The LLC opens a Mercury account — the bank asks for tax certification. Wrong answer: a W-9 in the LLC's name with the EIN. Right answer: a W-8BEN in the French owner's name (the LLC is disregarded — its tax personality is the owner's). Mercury then runs the account on a non-US-person basis, no 1099-K issued, no backup withholding.

Common mistakes

• Using the LLC's EIN on a W-9 when the owner is a non-US person. The LLC has no US tax personality of its own; the form must reflect the owner's status. This is the single most expensive paperwork error in non-resident LLC banking.
• Using SSN when the entity is a multi-member partnership. Multi-member US LLCs are partnerships for federal tax — they file W-9 with the LLC's EIN, not any single owner's SSN.
• Confusing US tax residency with status. A foreign person who passes the Substantial Presence Test and becomes a US resident alien switches from W-8BEN to W-9 mid-year. Failing to update the form leaves the payer under-withholding.
• Treating refusal to provide W-9 as the payer's problem. It is — the payer must apply 24% backup withholding without one — but the IRS sees a missing W-9 as the payer's problem to enforce.