Backup Withholding

Backup withholding is a type of tax withholding that is used to collect taxes from taxpayers who do not provide their Social Security number or other required information to the payer. The backup withholding rate is 24%, and it is applied to all payments made to the taxpayer.

Backup withholding is required for payments made to independent contractors, freelancers, and other non-employees. It is also required for payments made to foreign persons and entities.

If you are a taxpayer who is required to provide your Social Security number or other required information to the payer, but you do not do so, the payer will be required to withhold backup taxes. You will be responsible for paying the backup taxes, plus interest and penalties.

There are a few exceptions to the backup withholding requirement. For example, backup withholding is not required if the taxpayer is a resident alien, or if the taxpayer has a valid Individual Taxpayer Identification Number (ITIN).

If you are a taxpayer who is subject to backup withholding, you can avoid having backup taxes withheld by providing your Social Security number or other required information to the payer. You can also avoid backup withholding by filing Form W-9 with the payer.

Form W-9 is a form that you can use to provide your Social Security number or other required information to the payer. You can download Form W-9 from the IRS website.

If you are a taxpayer who is subject to backup withholding, you should contact the payer to provide your Social Security number or other required information. You should also file Form W-9 with the payer.