Investor · Torrance, CA · Member since 2014 · 75 posts · 13 votes
Good afternoon,
I have a friend that is renting her home to a business in Texas and they have requested a W9 from her. Is this standard practice when renting to a business? would they request this form at the beginning of their tenancy or during tax time? Just wondering why they need this form.
Professional · Riverside, CA · Member since 2009 · 254 posts · 273 votes
11y
A W9 is used when hiring independent contractors typically. If you are running a business, and you deal with another business that is an independent contractor, you would ask them to fill a W9 so you can properly issue them a 1099. IRS requires businesses to issue 1099 under certain conditions. So no, it's not for deduction purposes. It's to follow IRS rules.
If the other party refuses to fill out a 1099, then your business is required to withhold a certain amount from their pay.
I have had some tenants ask me to fill out W9's, but most don't. I just go ahead and do it as the only reason not to is if I'm trying to hide rental income from the IRS. These tenants at the end of the year issue me a 1099 for the amount they paid me in Rent for the year.
As to whether it is actually required for a landlord/tenant...I don't think so. But I would consult a tax professional on this question.
On another note. I hope your friend's home is properly zoned for business.
This is standard and generally a required practice. In general, you can deduct rents paid for property used in your trade or business and the 1099 will help substantiate the amount. See the following link for 1099 reporting - business rents is one of the items: http://www.irs.gov/Businesses/Small-Businesses-&-S...
On a side note, I can't imagine a time you would need to fill out a W9 for a residential tenant.