backup withholding

listen to the pronunciation of backup withholding
Englisch - Türkisch
Yedek stopaja
Englisch - Englisch
A system whereby payments of interest and dividend earnings financial institutions report to the Internal Revenue Service are matched against the income individuals report
The procedure by which a payor of interest must withhold a portion of that interest under certain restrictions
Withholding and paying the IRS 31% or 30 5% of certain payments made to you, including payments from distributions and redemption proceeds Certain payments you received will be subject to backup withholding if: You did not furnish your Taxpayer Identification Number (TIN) to AIM The IRS notified AIM that you furnished an incorrect TIN The IRS notified you that you are subject to backup withholding because you failed to report all interest and dividends on your tax return You did not certify to AIM that you are not subject to backup withholding The backup withholding rate is 31%, prior to August 7, 2001 As of August 7, 2001, the withholding rate is 30 5% Backup withholding is claimed when filing your tax return and will either increase the amount of your tax refund or decrease the amount of additional tax you may owe
Tax withheld from investment income, such as interest and dividends, to ensure that tax is collected on the income Banks and other organizations are required to report to the IRS all interest and dividend payments you received, along with your Social Security number or other taxpayer identification number If you don't give them correct reporting information for you, they are required to withhold 31 percent of your investment income The IRS may also require the bank or other organization to withhold tax if it determines you have underreported your investment income If backup withholding is taken out of your earnings, it will show up as "Federal income tax withheld" on the Form 1099-INT or Form 1099-DIV that the bank sends you each January
Unless a Social Security or Tax Identification number is filed with a financial institution, the Internal Revenue Service requires 20% of all interest or dividend income be withheld Backup withholding may be avoided by filing a W-9 form when opening an account with a financial institution
Usually Federal Income Tax (FIT) withheld from interest payments to a customer's bank account when no Social Security Number is on file Financial institutions are required to deposit and report this withholding with their federal payroll taxes on Form 945 Banks, savings and loans, and similar types of institutions are required by law to withhold 31% of taxable interest or dividends paid on accounts that have failed to furnish correct taxpayer identification numbers (Social Security numbers)
Those who make payments to others of interest, dividends, rents, royalties, etc , must, under certain circumstances, withhold income tax from the payment For example, if you fail to provide your bank with your taxpayer identification number, the bank is required to withhold income tax from the interest it pays you
The withholding of taxes (at a 31% rate) on disbursements from a client's mutual fund if the client or back office has not supplied the fund company with a correct TINor if the fund is notified that the client has underreported their income to the IRS There are four types of backup withholding: 1) applied for ( the client has applied for, but not yet received their TIN), 2) B Notice, 3) C Notice, 4) Noncertification
backup withholding


    back·up with·hold·ing

    Türkische aussprache

    bäkʌp wîthhōldîng


    /ˈbakˌəp wəᴛʜˈhōldəɴɢ/ /ˈbækˌʌp wɪθˈhoʊldɪŋ/

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