What’s New on Form W-9: A Closer Look at 2024 Updates

Staying in the loop with the latest IRS updates isn’t just a task for the tax-savvy—it’s a strategic move that can streamline your entire tax season. Whether you’re running a bustling enterprise or a budding startup, keeping abreast of these changes can mean the difference between a smooth sail and a stormy ride come tax time.

If your business transactions involve contractors or vendors, requesting a W9 form isn’t just a routine step—it’s your ticket to gathering essential details like names, addresses, and tax identification numbers, ensuring your financial records stay shipshape.

There are some changes to Form W-9 for 2024. This blog will give you an overview as well as insight into how this may affect your business’s compliance process moving forward.

IRS Revisions to Form W-9 for 2024

The IRS has recently issued a revised version of the W-9 form, introducing several changes from its predecessor. Notably, the new Revised Form W-9 features an additional line designated as Line 3b, while Line 3 has been divided into two separate sections, now labeled as lines 3a and 3b. For a closer look at the IRS Revised Form W-9, you can click here.

New Additions: Lines 3a and 3b

On-Line 3a, business entities are required to specify their federal tax classification, which encompasses options such as individual/sole proprietor/single-member limited liability company (LLC), C corporation, S corporation, partnership, or trust/estate. Additionally, LLCs must indicate their tax status as either an S corporation, C corporation, or partnership.

Line 3b introduces a checkbox for business entities to indicate whether they have any foreign partners, owners, or beneficiaries. According to the revised Form W-9, this line pertains specifically to “flow-through entities.” Moreover, on Line 3a, businesses must select either “Partnership” or “Trust/estate” if they have “Partnership,” “Trust/estate,” or “Foreign Partners, Owners, Beneficiaries.

Purpose of Adding Lines 3a and 3b:

Per the updated IRS guidelines, Line 3b is designed to signal whether the entity possesses any foreign direct or indirect partners, owners, or beneficiaries at the time of submitting W-9s to other flow-through entities.

In the realm of business, a flow-through entity directs its generated income straight to its shareholders or owners, bypassing inclusion on the business tax return. These shareholders then report their portion of the income on their individual tax returns. Aside from this adjustment, no further alterations have been made to the final iteration of Form W-9.

The Fillable Form W-9 from TaxBandits:

TaxBandits offers a simple solution for completing and sending your Form W-9 to the businesses you work with! The process is easy and accurate. Fill out a Form W-9 and then choose to download it or share it with your payer instantly via email!

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