Guides › Crypto Exchange Asks for a W-9: Backup Withholding Basics
Crypto Exchange Asks for a W-9: Backup Withholding Basics
General information, not tax, legal or financial advice. We are not the IRS. Check IRS.gov or a qualified tax professional. Sources read on October 17, 2026. Dates for 2027 are expected. Examples use made-up numbers. This page contains no affiliate links.
Short answer: The 1099-DA instructions say brokers use Form W-9 to get your taxpayer identification number (TIN) and enter any backup withholding in box 4 (Federal income tax withheld). Pub. 505 (2026) says the flat backup-withholding rate is 24% when you don't give your TIN in the required manner or the IRS says it is incorrect. The IRS also gives brokers temporary relief from backup withholding obligations.
What the pages say
- Box 4: the broker enters backup withholding, for example for customers who have not furnished their TIN. For rate and rules the instructions point to part N of Pub. 1099 and to Notice 2025-33 for transitional relief.
- Foreign recipients: the broker asks for the appropriate Form W-8 instead of W-9.
- Pub. 505 (2026): payers withhold at a flat 24% when you fail to give a TIN correctly, the IRS notifies the payer that the TIN is incorrect, or you fail to certify when required. The IRS may also require backup withholding for underreported interest or dividends after notices.
- Transition relief (IRS Digital assets page): Notices 2024-56 and 2025-33 relieve brokers from backup withholding obligations and penalties for all transactions in 2025 and 2026. For 2027, relief applies where the broker obtains the customer's TIN and the name-TIN combination matches IRS records through TIN matching, and for certain preexisting accounts with a non-U.S. address not previously treated as U.S. persons. Relief continues, until further guidance, for dispositions in return for certain NFTs or real property and certain payment processor sales.
Why it matters to you
The 2027 conditions are described as relief for brokers, so we expect exchanges to ask more customers to confirm their TIN during 2026-27. We cannot say how each platform will behave. Withheld tax appears in 1099-DA box 4 and is a credit on your return (box guide).
Practical points
- Respond to platform requests through official in-app flows; never email your SSN or TIN.
- If you receive an IRS notice about an incorrect TIN, follow its instructions.
- Keep the 1099-DA and records of any withholding for your return (no 1099-DA case).
FAQ
Is backup withholding an extra tax? It is an advance payment of income tax you credit on your return; the pages we read describe it as withholding.
Does a W-9 request mean I did something wrong? No; the instructions say brokers use W-9 to request your TIN.
What we could not verify
- Part N of Pub. 1099 (rate rules and timelines) and Notice 2025-33 text (not read).
- Platform-specific practices.
- Whether the 2027 relief conditions change before the year.
Sources (official)
- IRS, Instructions for Form 1099-DA (2026) — https://www.irs.gov/instructions/i1099da (PDF read in full 17 October 2026)
- IRS, Digital assets — https://www.irs.gov/filing/digital-assets (read in full 17 October 2026)
- IRS, Publication 505 (2026), backup withholding section — https://www.irs.gov/publications/p505 (PDF read 17 October 2026)
Not tax advice. Examples use made-up figures. Nothing here has been reviewed by a tax professional. We may earn commissions from affiliate links where marked; see the disclosure.