12/27/2023 0 Comments Irs backup withholding meaningYou do not tell the payer that you are NOT subject to backup withholding.The IRS notifies the payer that the SSN or TIN you reported is wrong.Don’t properly provide your SSN or TIN (usually, filling out a W-9).If you refuse to provide your SSN or TIN to the payer (in which case backup withholding will start immediately).Under certain circumstances, the company that pays you the money can withhold 28% of the payment and send it to the IRS. If the person or company doesn’t have your Social Security number, they are required to withhold some of the money before they pay it to you, to cover the taxes you are likely to owe on that money. Backup withholding makes sure that taxes are paid on your earnings, even if you did not fill out a W-9, or the information you provided isn’t correct or doesn’t match. And in many situations, they are required to withhold some of the money and send it to the IRS. While there are some situations in which you might not receive a 1099 or W-2, you are still legally required to report all of your income on your 1040 at the end of the year, and pay taxes on the correct amount, whether or not you got an official form.Īlso, even if the company that paid you isn’t able to correctly fill out your form, they are still required to file it with whatever information they do have. Many people incorrectly think if they earn some money, but avoid filling out a W-9, they won’t have to include that money as income on their taxes, and thus won’t have to pay income tax on it. If they don’t have this information, or your name and SSN or TIN don’t match, this causes problems for the IRS when they try to report having given you the money. Usually, they’ll request this information from you by having you fill out a W-9 form. However, to correctly fill out that form, the person or company that gave you the money will need your Social Security number or Taxpayer Identification Number. It allows the IRS to match up the income that other people report having given you with what you say you received during the year. When you earn any income or receive any money from a person or company, that person or company is usually required to file a form with the IRS, such as a W-2 form for a regular job, a 1099-MISC for contractor work, or a 1099-DIV for dividend payments. Here we’ll discuss what backup withholding is, when it might be used, and how it affects your tax return. ![]() If you’ve ever filled out a W-9 form, one of the things you had to certify was that you were not “subject to backup withholding.” Or, if you’ve received tax form 1099 from someone who didn’t have your Social Security number, you might have received less money than you were counting on because of backup withholding.
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