W-9 for Non-Profit Organizations - An Overview

Updated on November 30, 2023 - 10:30 AM by Admin, TaxBandits

The IRS provides nonprofit organizations with a tax exemption, making them exempt from paying federal income taxes. This means they don't have to deal with many tax forms, unlike other business organizations.

Form 990 is one form that nonprofits will file annually to report their finances, activities, and much more to the IRS. In addition to that, nonprofits might have to deal with one another form more often, that is, W-9. Though it isn't a tax form, the W-9 may play a vital role in ensuring compliance for nonprofits.

Read through this article to understand everything the nonprofits should know about Form W-9.

Form W-9 - An Overview

Generally, Form W-9 is an IRS document that the payers will use to obtain Name, Taxpayer Identification Number (TIN), Address, Federal Tax Classification, Exemption Codes, etc. from their payees.

Using the information provided on W-9, the payers will file 1099 forms at the end of the year to report the payments they make to each payee (if the total payment exceeds $600).

1. Understanding the Purpose of W-9 for Nonprofits

As a nonprofit organization, you may come across the W-9 Form for two reasons. Either you may have to request W-9s from your payees (or) submit your W-9 to your payers.

Request W-9:

  • If your nonprofit has hired any individuals or entities on a contractual basis to perform any specific activities, you’ll need to obtain Form W-9 from them for reporting the payouts you make.
  • For example, let’s say, your nonprofit has planned to construct a free-to-use swimming pool for sports professionals and has hired independent contractors for construction works.
  • In this case, you must obtain a W-9 from each of these contractors. You can then use the information they provide on W-9 to file 1099-NEC for them, if applicable.

Fill W-9:

  • In certain instances, your nonprofit organization may have to fill out and submit a W-9 to other businesses or individuals (payers).
  • Let’s say your organization is a 501(c)(3) hospital and has provided paid consulting services for a third-party business. In this case, the respective business will request you to furnish a W-9 Form so that they can file a 1099 for you at the year-end.
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Note: If you are a payee, you can directly complete and share your W9s with your payers. Click here to learn more information about Fillable W-9.

2. How to Fill Out a W-9 for Nonprofits?

If your nonprofit is required to complete a W-9 Form, you can follow the instructions below:

  • Name (Lines 1 and 2): Enter the legally registered name of your nonprofit organization in Line 1. You can leave line 2 blank or mention the Trade name if you have one.
  • Federal Tax Classification (Line 3): You can check the 'Others' box and specify the classification type as 'Nonprofit Corporation Exempt Under IRC Section'.
  • Exemptions (Line 4): Here, you’ll need to enter the applicable codes to indicate that your nonprofit is exempt from Backup Withholding and FATCA Reporting.

    For organizations exempt from tax under section 501(a):

    • Exempt Payee Code is 1
    • Exemption from the FATCA reporting
      code is A
  • Address (Lines 5 & 6): Provide the complete address of your nonprofit organization.
  • Account Number (Line 7): List the account number, if any.
  • Taxpayer Identification Number (TIN) - Provide the Employer Identification Number (EIN) of your nonprofit.

3. What Happens if My Nonprofit Fails to Provide W-9?

If your nonprofit fails to provide a W-9 or provides an incorrect TIN to your payers, they can withhold 24% of taxes from the payments they make you.

To avoid this, it’s important that you provide the EIN of your nonprofit promptly to the payers who paid you.

4. Fill Out a W-9 for Your Nonprofit Easily with TaxBandits!

Use our fillable W9 solution to complete, e-sign, and download or share the W-9 Form of your nonprofit in minutes!

Also, if you are required to collect W-9s from the contractors hired by your nonprofit, you can use our Form W-9 Manager to request W-9 online and manage them securely in one place.

Request that your Vendors Complete, E-sign, and
Submit their W-9 Online