![]() Your employer is always required to file a form with the IRS, whether it be a W2, a 1099-MISC, or a 1099-DIV. You may also recognize the phrase “subject to backup withholding” if you’ve ever filled out a W-9 form. Payments from a Form 1099 are subject when you receive it from someone who doesn’t have your Social Security number. Most payments that are reported on Form 1099 can be subject to backup withholding. There are a few instances when you may be subject to a backup withholding, like when you fail to report or have provided an incorrect taxpayer identification number (TIN). Many people are exempt from and never experience backup withholding taxes, so many wonders what to do when they receive the notice in the mail. For federal tax purposes, backup withholding is sometimes mandatory. The backup withholding tax is only imposed by the IRS upon certain types of income as a “just in case” measure so that you do pay some of your taxes. The IRS imposes a backup withholding tax when they have a discrepancy with the SSN or TIN that you or your employer provided. No matter what your tax status or financial circumstance, the team at Community Tax can help you navigate your way to financial freedom. ![]() Just seeing the title “IRS” emblazoned on the envelope can make you feel like the worst is about to happen, but this doesn’t need to be the case. ![]() When you receive a notice from the IRS, the envelope alone can be heart-stopping. Additionally, you are exempt if you have not been notified by the IRS that you are subject to mandatory backup withholding. citizens or resident aliens are considered exempt from backup withholding if their reported name and Social Security Number matches the IRS records. Who’s exempt from Backup Withholding Taxes? In this post, we’ll define backup withholding, discuss who’s exempt, what to do if you receive a notice, and more. and it can take a massive toll on both your personal and professional life. Taxes are one of the largest stressors in the U.S. Whether it be a lien, a garnishment, a levy, or worse, many taxpayers like you suffer from the same anxiety and distress. Thousands of taxpayers across the country face tax issues every year. Tax laws change annually, so if you make even a simple mistake, you could be in danger of receiving a backup withholding notice. Even though the IRS spells out its tax regulations and gives us instructions, the amount of forms to fill and regulations to understand can become overwhelming- and it doesn’t get any easier when you receive a backup withholding notice. Every year we file our taxes, and every year it seems to get more complicated.
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