Form 1099 INT or DIV

• Payers of interest and dividends must report them on form 1099.financial report image by PaulPaladin from Fotolia.com
  
  Tax compliance law requires that all payers of interest or dividends supply payees with a 1099 information return that is simultaneously reported to the IRS. For U.S. citizens, a correct taxpayer identification number (TIN) must be supplied by the payee via form W-9. For foreign persons, a proper exemption from backup withholding requirements must be obtained via form W-8. Failure to comply with these requirements, obligates the payer to withhold 30 percent of the payment amount in favor of the IRS.
  
  

Form W-9

• TINs must be correctly presented to the IRS.u.s. flag image by Paul Moore from Fotolia.com
  
  Form W-9 must be obtained by the payer of dividends or interest at the time that the payee account is opened. If incorrect TINs are furnished or the IRS notifies the payer to withhold taxes due to other problems, withholding must take place.
  
  

Form W-8

• W-8 forms provide foreign payee exemption from backup withholding.european passport image by Albert Lozano from Fotolia.com
  
  Form W-8 must be furnished by the U.S. payer of interest or dividends in order to obtain exemption from backup withholding, which is usually based upon reciprocal tax treaties between the U.S. and the foreign country where the payee resides.