April 21, 2023

Completing the Distrokid W-9 Form: Step-by-Step Instructions

Contents

Independent musicians and labels use Distrokid to distribute their recordings to the various streaming platforms. In return, Distrokid collects and pays out streaming royalties to its users.

Under U.S. tax law, Distrokid must provide an annual tax form to both the Internal Revenue Service (IRS) and its users. If you received a royalty payout from Distrokid, there’s a good chance that you’ll receive a 1099-MISC for filing your personal taxes.

Before receiving a payout, Distrokid requires its U.S.-based users to provide tax information. You’ll provide your tax information on the Form W-9. 

It’s important to provide an accurate W-9 because it will impact the 1099-MISC you receive at the end of the year. In this guide I’ll answer frequently asked questions about the Distrokid W-9 and show you how to complete it.

What is the Distrokid W-9 form?

Distrokid uses the Form W-9 to request a Tax Identification Number (TIN) from businesses and individuals who are receiving a taxable royalty payment. The W-9 you complete for Distrokid is an electronic version of the standard IRS Form W-9.

If you’ve ever worked as an independent contractor, your client probably requested a W-9 from you prior to beginning work. As a musician, you might have provided a Form W-9 to a promoter or agent when booking a gig. 

In either case, the requester uses the information on the W-9, such as your TIN and name, to file a Form 1099 the following year. You’ll use the Form 1099 to file your tax returns, take deductions, and pay taxes.

The Distrokid W-9 is used for the same purpose. Distrokid requests a Form W-9 so they can accurately file an accurate 1099-MISC on your behalf at the end of the year.

Why is Distrokid asking for your tax information?

Before making a payout, Distrokid asks each and every user to verify their tax information. Distrokid is required to verify the tax information of its users under U.S. tax law. Therefore, Distrokid is asking for your tax information to comply with U.S. tax law.

The income you earn through Distrokid is royalty income. Royalty income is a type of income that’s subject to “backup withholding.” In the absence of a signed W-9 form, Distrokid would be required to withhold 24% of your royalty payouts and send the withholdings to the IRS.

That’s obviously not ideal, so to avoid the mandatory withholding Distrokid requests your tax information before sending you a payout. This works better for all parties. Distrokid complies with the law and you get a higher payout.

Distrokid will then use your tax information to prepare your Form 1099-MISC in the following year. The Form 1099-MISC includes the gross payouts you received. Two copies are provided: one to the IRS and one to you. You’ll use the Form 1099-MISC to prepare your personal tax returns.

How to fill out the Distrokid W-9 form

By providing an accurate Form W-9, you can avoid headaches when tax season rolls around. Here’s a walkthrough of providing Distrokid an accurate Form W-9.

Step 1: Select the W-9 option

If you’re a United States citizen or resident, select the “W9 - for US individuals/entities” option. 

Select either of the W-8BEN options if you’re a nonresident.

Select the W-9 option

Step 2: Specify your tax classification

Your answers in this step depend on whether you’re operating through a legal business entity or as an individual.

Check the appropriate box based on your tax classification.

Box: “Name”

Input your personal name if:

  • You operate under an artist alias and haven’t yet formed a legal business entity;
  • You are the sole-member/owner of the LLC under which you operate your music business.

If either is true, don’t input your artist alias or LLC name here. Input these names into the Business Name field below. Only input your personal name in this box. 

If neither is true, input your business name. This would be the case if you operate your music business under a legally formed corporation, LLC with more than one member/owner, or a general partnership (i.e. unincorporated business with a business partner).

Box: “Business Name”

If you input your personal name in the previous box, input your alias, “DBA,” or other trade name into this box. This is the name under which you release and record your music.

If you operate under a single-member LLC, input the LLC’s name here. 

If your business entity operates under a name other than its legal name, input the trade or “DBA” name here.

Box: “Check the appropriate box”

In this section you’ll specify your tax status as an individual or legally formed business entity.

Category When to check the box
Individual/sole proprietor or single-member LLC You haven’t formed a legal business entity or you’ve formed an LLC and you’re the sole owner/member.
C or S Corporation You’ve formed a legal corporation with a state.
Partnership* You haven’t formed any legal business entity but you and a business partner are splitting the royalty income.
Limited Liability Company You’ve formed an LLC and have elected to be taxed as a corporation or the LLC has more than one member.

*Don’t select the partnership option if you’ve set up splits within Distrokid. Selecting the partnership option will require you to obtain a separate Tax Identification Number (called an “EIN”) and file a separate tax return (the Form 1065), which probably isn’t needed. You can split royalty payments in Distrokid without forming a tax partnership.

Step 3: Provide your state of residence & TIN

Provide the correct Tax Identification Number.

Box: Address fields

The address you provide in this box should be an address that can receive mail, otherwise you may not receive your end-of-year tax form from Distrokid. Your home address will work (provided it can receive mail).

Box: “Taxpayer Identification Number (TIN)”

In this section provide your Social Security Number or Employer Identification Number.

If you operate as… Then input…
Individual Your Social Security Number
Single-member LLC* Your Social Security Number
Corporation (S or C) The Corporation’s Employer Identification Number (“EIN”)
Partnership The Partnership's Employer Identification Number (“EIN”)
Limited Liability Company (LLC)* The LLC’s Employer Identification Number (“EIN”)

*Single-member LLCs are taxed under your personal Social Security Number. Even if you’ve formed an LLC, obtained an EIN, and opened a bank account for the LLC, the IRS’ Form W-9 instructions require you to provide your personal Social Security Number as a sole proprietor. In some cases, if you’ve elected Corporation status for your single-member LLC, you can provide the LLC’s EIN instead of your SSN.

Step 4: Certify accuracy of the W-9 responses

In this section you’re certifying that the information you’ve provided is accurate and that you’re not subject to backup withholding. In general, you’d know if you were subject to backup withholding because the IRS would have previously informed you.

Read each statement and sign the certification, assuming each statement is correct.

Sign the Form W-9 to acknowledge the certifications.

How to file your Distrokid taxes

Giving Distrokid your tax information through the Form W-9 questions is step number one in the tax filing process.

Once the year has ended, Distrokid will use the information in your Form W-9 to prepare another tax form: Form 1099-MISC. The total amount of royalty payouts you received from Distrokid are reported on the 1099-MISC. 

You’ll then use the 1099-MISC to prepare your personal income tax return and, perhaps, take deductions and pay taxes.

Check out my detailed guide on the Distrokid Form 1099-MISC to learn about the filing process, tax deductions, self-employment taxes, and other useful information for filing your Distrokid taxes. 

Consult a tax professional if you have questions

The Distrokid Form W-9 is important to get right. It’s not a difficult form but the information you provide does impact your tax reporting. If you have questions about your W-9 or Distrokid tax questions, get in touch through the contact form below to speak with a CPA familiar with the music industry.

This content is for informational purposes only and does not constitute legal, business, or tax advice. You should consult your own attorney, business advisor, or tax advisor regarding matters mentioned in this post. We take no responsibility for actions taken based on the information provided.

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