To earn interest on your Wise Balance as a US customer, we have to make sure we're reporting your correct details to the IRS as an added layer of security.
Learn more about earning interest on your Wise Balance as a US customer
Tax Verification
Wise is a payer of interest, so the IRS needs us to file a 1099-INT tax form each year for each payee that earns more than $10 of interest a year. The form shows the annual income earned and tax withheld. Wise only offers this product to US persons* and won't withhold any tax (standard or backup withholding) unless necessary.
TIN
A TIN is a Taxpayer Identification Number, and it's your EIN or SSN.
The IRS has recently launched a TIN Matching Service, and Wise will use this matching tool in our interest onboarding process. This will match your TIN with your legal name on file with the IRS, and this should match the most recent tax return you have filed. Wise can then verify who you are before allowing you to earn interest with our product.
Backup withholding
Backup withholding is a type of US federal income tax, which is deducted by payers (Wise) when a customer’s 1099-INT form didn't provide a valid TIN, or didn't show they're exempt from backup withholding.
It's calculated using IRS tax rates of 24% for US citizens and resident aliens, or 30% for non-resident foreign persons. Wise is only offering its interest feature to verified US persons to minimise its backup withholding obligation.
Once Wise files the 1099-INTs with the IRS, the IRS then runs checks against their TIN database to see if there are any customer name or TIN mismatches. If there's a mismatch, IRS sends a letter to Wise, known as a B notice. This letter tells us we'll need to run backup withholding on any customers with a mismatched TIN that we can't fix. To avoid this process, Wise needs all US customer TINs to match the IRS database before they can opt in the interest feature for US customers.
Why TINs can fail
Your TIN (either EIN or SSN) can fail our onboarding process if the number or name doesn't match the IRS system exactly. Please check your most recent tax return with the IRS to see exactly how your name appears in their system.
Even if your TIN and your name are correct, but looks different from the IRS records in any way, it could still show as an end-of-year mismatch — this means Wise may need to backup withhold. Wise refers to the IRS system for the correct name and TIN when you onboard to Interest.
What if I get a name or TIN mismatch?
If you have a name or TIN mismatch when onboarding to the interest feature, you'll need to verify that your TIN information is correct with the IRS first. Please check with the IRS and LexisNexis about the issue before contacting our Customer Support — we can't force an IRS match.
If your information is up to date and was entered correctly — please let our Customer Support team know.
If your information needs to be changed, you can contact Customer Support with the updated information, and we'll give you a secure way to send it to us. If you're eligible, we can give you an additional opportunity to opt in interest.
Disclaimer
* The definition of a US person can be found in the Form W-9 instructions. For federal tax purposes, you're considered a US person if you are:
An individual who is a US citizen or U.S. resident alien
A partnership, corporation, company, or association created or organised in the United States or under the laws of the United States
An estate (other than a foreign estate)
A domestic trust (as defined in Regulations section 301.7701-7)