U.S. residents are required to file information returns with the IRS when certain financial activities occur. An example of these activities include: income paid, real estate transactions, mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, and contributions made to an IRA…to name a few. When filing a return, a taxpayer identification number (TIN) is required.
The completion of a W-9 form is only necessary if you are a U.S. resident (including a resident alien) and have not already obtained a TIN. In addition to filing tax returns, where applicable, the TIN form is also used to:
- Certify the TIN you are giving is correct (or waiting for a number to be issued).
- Certify you are not subject to backup withholding.
- Claim exemption from backup withholding, if you are a U.S.-exempt payee.
Completing a W-9 form is straightforward. Just provide your name, address, and Social Security Number; or the name, address, and employer identification number of your business. By submitting a W-9 form to your employer, you are certifying that the tax ID number provided is correct and that you are not subject to backup withholding.
As an employee, it is your responsibility to understand all tax implications that impact your equity and/or share purchase holdings.