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Choosing the right taxpayer identification number for a Form 1099 can be confusing, especially when a vendor uses a business name, operates as a sole proprietor, or owns an LLC. The name on an invoice is not always the name that belongs with the TIN on the form.
The correct TIN depends on the recipient’s tax status. If you are looking to understand which TIN to use on Form 1099 and how to report the recipient’s name and TIN correctly, continue reading.
The recipient’s Taxpayer Identification Number (TIN) identifies the person or entity whose payment is being reported on Form 1099. SSNs get issued by the Social Security Administration, while EINs, ITINs, and ATINs are issued by the IRS. Depending on the taxpayer, the TIN may be a:
As a payer, you can enter only one recipient TIN on each Form 1099.
The right TIN depends on who the taxpayer is and how the business is treated for federal tax purposes. The easiest way to identify it is to check the recipient’s completed Form W-9.
For instance, if a freelance designer who operates a sole proprietorship called “X Design Studio’ gives the payer a Form W-9 showing their individual name on Line 1 and the business name on Line 2, then while preparing the 1099, the payer should use the name and TIN combination shown on the completed Form W-9, rather than choosing a TIN based only on the business name.
The IRS recognizes SSNs, EINs, ITINs, and ATINs as different types of TINs. An SSN identifies an individual, an EIN identifies a business entity, and an ITIN is used by certain individuals who cannot obtain an SSN.
For a U.S. recipient, request the applicable Form W-9 and use it to determine the recipient’s name and TIN for Form 1099 reporting. Transfer the taxpayer name and applicable TIN as they appear on the W-9.
Before filing, check that the name and TIN belong to the same taxpayer. For example, if a sole proprietor’s W-9 lists the owner’s name on Line 1 and a business name on Line 2, do not replace the owner’s name with the business name on the first line.
If the W-9 information is unclear or the name and TIN do not correspond, request a corrected W-9 before filing.
When the recipient’s information does not clearly identify the correct TIN, check the completed Form W-9. Match the TIN in Part I with the taxpayer name on Line 1 and the tax classification on Line 3a before filing. The IRS says the TIN provided should match the name entered on Line 1.
The TIN that matches the taxpayer name and tax classification shown on the completed Form W-9 should be used. For example, a sole proprietor generally reports the individual’s name on Line 1, even when a business name appears on Line 2.
Ask the recipient for a corrected Form W-9 when the name, tax classification, and TIN do not line up. Do not choose between the SSN and EIN based only on the business name.
Do not:
Request the recipient’s taxpayer information before filing. If the recipient still does not provide a TIN, leave the recipient TIN box blank. Backup withholding generally applies to reportable payments when the recipient does not provide a TIN, provides an obviously incorrect TIN, or the IRS tells the payer to begin withholding. The current backup withholding rate is 24%.
The name on an invoice does not always tell you which TIN belongs on Form 1099. These common examples can help you identify the right information before filing.
Let’s say you receive invoices from “Bright Design Studio,” but the Form W-9 has listed Alex Carter as the taxpayer.
What you should do: Enter Alex Carter’s name and applicable TIN on Form 1099. You can use “Bright Design Studio” on the second name line as the business or DBA name.
Let’s say Taylor owns Taylor Consulting LLC. This is a single-member LLC that is treated as a disregarded entity. The LLC also has its own EIN.
What you should do: Use Taylor’s SSN or EIN, not the LLC’s EIN.
In another scenario, imagine that you made a payment to an LLC, but the completed W-9 identifies the individual owner as the taxpayer.
What you should do: Use the owner’s taxpayer name and applicable TIN shown under the W-9 rules instead of assuming the LLC’s EIN belongs on the 1099.
When you check your vendor records, you find that it shows one business name, while the W-9 lists a different taxpayer name.
What you should do: Use the taxpayer name and corresponding TIN required for Form 1099 reporting, rather than relying only on the invoice.
Your vendor operates as an LLC, but the W-9 shows that the LLC is taxed as a corporation.
What you should do: Report the LLC’s applicable tax name and EIN, because the LLC itself is the taxpayer being reported.
No, the type of form has no bearing on it. The applicable recipient TIN depends on the taxpayer being reported, not simply on which type of Form 1099 the payer files.
No. The payer’s TIN identifies the filer, while the recipient's TIN identifies the taxpayer whose payment is being reported.
Yes. An ITIN may be the appropriate recipient TIN when the individual properly uses an ITIN for U.S. tax purposes.
The TIN should correspond to the taxpayer reported on the first recipient name line. A DBA or disregarded entity may appear on the second line.
No. The payment amount may affect whether reporting is required, but it does not determine which taxpayer identification number belongs to the recipient.
File With the Right Recipient TIN Tax1099 helps you collect W-9s and check recipient name and TIN combinations before filing with real-time, 24-hour, and bulk TIN matching. Check TINs & eFile 1099 Forms with Tax1099
Tax1099 helps you collect W-9s and check recipient name and TIN combinations before filing with real-time, 24-hour, and bulk TIN matching.