Totally wrong everyone; I am a realtor located in Englewood Cliffs, NJ and I cover Fort Lee in daily bases.
The W-9 form is actually a legal requirement in order to open an account for the security deposit. The security deposit goes in to an interest baring account, separate from the landlordâ€™s accounts. The bank reports this account to the IRS and that is the reason for asking for the W-9 form. In your case Sophia, it sounds like the landlord is doing the legal thing which not many of the landlords do. As a realtor I advise you to fill out the form and do not fear it.
Also, the interest on most Security Deposit accounts is probably 1% or less so you probably would only have reportable income if the amount in the account was over $1,000.
Finally (and this is the only part I'm not 100% sure about...maybe a C.P.A. could comment on this) anyone holding an interest bearing account for another (Ex; landlord holding a Security Deposit in an interest bearing account for a tenant), would have to withhold 28% from that interest and pay it directly to the I.R.S. Again, if your Security Deposit is less than $2,000 we're talking about a pretty insignificant amount of dollars here.
BEWARE of asking tenant rights questions to landlord sites or taking tenant advice from realtors/landlords, etc., because they have an obvious conflict of interest.
What's Form W-9?
Sunday January 27, 2008
Independent contractors and other people who work for themselves will need to report their Social Security Number or business tax identification number to their clients. This is done using Form W-9. As far as tax forms go, this is pretty straightforward. You provide your name, address and Social Security Number. For contractors who have a separate business entity, they provide the name, address and Employer Identification Number of their business.
The W-9 form also asks whether you are subject to backup withholding. This is withholding at a flat rate of 28% on payments made to you or your business under certain circumstances. There are two common reasons for backup withholding: your name and SSN as provided on Form W-9 don't match the IRS' records, or you have outstanding tax debts and the IRS has notified you that you are subject to mandatory backup withholding until the taxes are paid in full.
Contractors might be getting W-9 forms to fill out this time of year as clients get ready to mail out their 1099-MISC forms to report self-employment income. Brokers and financial institutions might also ask for a W-9 form if you'll be earning interest income, dividends, or trading stocks and other securities