W-9 Form Canada
Updated on January 27, 2025
Reviewed By
Deborshi Choudhury, an IRS Enrolled Agent with 17 years of expat tax experience, specializes in U.S. tax preparation, tax planning, and tax advice for U.S. citizens and Green Card holders living and working in the UAE and Canada. *Schedule a consultation with Deborshi today.
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Table of Contents
Can I submit a W-9 Form in Canada?
Although a Form W-9 is issued by the Internal Revenue Service (IRS) in the US, there are circumstances that Canadian residents will be required to complete and submit this form.
Scenarios where a Canadian resident may be required to complete a W-9 are if they work for a US company remotely from Canada, have made property investments within US boundaries, or have their finances vested in US companies.
What is a W-9 Form?
A W-9 Form is made to enable the request of a taxpayer’s Taxpayer Identification Number (TIN), which could either be a Social Security Number (SSN) or an Employer Identification Number (EIN).
This identification is crucial for the person or entity disbursing income to accurately report these payments to the IRS, effectively keeping a tab on taxable transactions.
What is the difference between a W-9 Form and a W-8BEN form?
While both forms serve a similar purpose, they differ in catering to the kinds of taxpayers. The W-9 Form is meant for US citizens who can also be Canadian residents. It also applies to dual citizens and entities operating in the US, such as those with US tax obligations.
On the other hand, a W-8BEN Form is for any foreign individual who is not a US citizen but earns US-sourced income, including only Canadian citizens.
Differences of W-9 and W-8BEN Form:
|
W-9 Form |
W-8BEN Form |
|
For US taxpayers/ citizens |
For non-US taxpayers |
|
Provides identification as a taxpayer for tax purposes |
Certifies foreign status |
|
Used to report income to the IRS |
Utilized for claiming tax treaty benefits. |
Who needs to complete Form W-9 in Canada?
Canadian residents who earn income from US sources need to complete this form. This could include a variety of circumstances, such as if they’re employed by a US company and work remotely from Canada, if they have rental income from a property in the US, or if they’re seeing returns from investments in US stocks or bonds.
Additionally, if you’re a Canadian business owner and have any US tax reporting responsibilities, you’ll also need to complete a W-9. Scenarios wherein your business operates in the US, you receive payments from US customers, or you have any other types of US tax obligations.
How do I complete a Form W-9?
Here’s a general idea of what to expect when filling out a W-9 Form:
- Basic identification: You’ll need to provide basic information like your name, address, and, importantly, your US Taxpayer Identification Number (TIN).
- TIN: As a Canadian, if you do not have a TIN but a Social Insurance Number (SIN), it’s important to consult a tax professional as it’s not common to use SIN in place of TIN.
- Federal tax classification: Identify the federal tax classification of your business. If you’re an individual, you can typically check the “Individual/sole proprietor” box.
- Requester’s name and address: If needed, fill in the requester’s name and address. This would be the name of the entity that asked you to complete the W-9 form.
- Certification: Finally, sign and date the form in the section labeled “Certification.” By doing so, you’re confirming that the information you provided is correct to the best of your knowledge.
Are there penalties for providing incorrect TIN?
Yes, providing an incorrect TIN can lead to tax complications and potential penalties. The IRS will require backup withholding, which takes 24% of your income. You can stop this once you provide the correct TIN to your requestor.
Additionally, the IRS may impose A penalty of US$50 per incorrect TIN for each failure, up to an annual cap. In instances where you show reasonable efforts to provide the correct TIN, the penalty may be waived.
It’s essential to ensure the accuracy of the information provided in the W-9 form. If unsure about any part of the form, consider consulting with a tax professional.
Our tax experts can assist with your US tax obligations in Canada. Contact us today.
Where should I submit my completed W-9 Form?
You can submit it to the US entity that’s paying you. This might be a client if you’re a freelancer or a financial institution if you’re receiving investment income.
This step is crucial, as the US entity must report the income they pay you to the Internal Revenue Service (IRS).
When is Form W-9 required under FATCA?
The Foreign Account Tax Compliance Act, or FATCA, requires Canadian financial institutions to report financial accounts held by US individuals or foreign entities with the aim of reducing tax evasion by US taxpayers using foreign accounts.
So, Canadian institutions use Form W-9 to gather necessary information from US account holders. The collected data is then reported to the IRS in line with FATCA regulations. This process helps the US government keep a keen eye on overseas financial assets held by US citizens, ensuring everyone plays by the rules in the global financial playground.
Is Form W-9 required under the Canada-US Enhanced Tax Information Exchange Agreement?
Yes, the Canada-US Enhanced Tax Information Exchange Agreement requires Canadian financial institutions to identify and report accounts held by US persons to the CRA.
The Canada-U.S. Enhanced Tax Information Exchange Agreement facilitates the implementation of the FATCA to combat further tax evasion by US citizens holding financial accounts in Canada.
So, the next time you are required to fill out a W-9 form for your mutual funds, insurance contracts, or investments, this might likely be the reason.
Do Canadians need to fill out Form W-9 under FATCA?
Not necessarily. For most Canadians, the W-8BEN form covers anything that has to do with US-sourced income. Submitting a W-9 incorrectly (if you are not a U.S. taxpayer) could result in unnecessary tax obligations or misclassification.
Canadians who are also US citizens (e.g., by birth or naturalization) are considered US taxpayers under FATCA. So, in this instance, they need to provide Form W-9 if requested by a Canadian financial institution.
Are there updates on the W-9 Form?
Yes, in 2024, the IRS revised the federal tax classification of W-9 Forms to increase awareness of flowthrough entities.
It added Line 3A and Line 3B, previously only Line 3. If they identify as a “Partnership” or “Trust/estate” in Line 3A, they need to confirm their foreign partners, owners, or beneficiaries in Line 3B.
How can I protect my personal information?
Since filling out a W-9 form requires sensitive information, here are some tips you can take to prevent identity theft and fraud:
- Secure Transmission: Always ensure that the method of sending your W-9 is secure. If sending electronically, check that the website is secure (look for “https://” in the URL).
- Limit Information Sharing: Only provide your W-9 to parties with legitimate needs, such as your employer or a bank.
- Check Authenticity: Before submitting your W-9, verify the requesting party’s identity to avoid falling victim to scams.
