| Tax Topic #307 |
2008 Tax Year |
Topic 307 - Backup Withholding
Banks and other businesses that pay you certain kinds of income must file
Form 1099, an information return, with the IRS. Generally, these payments
are not subject to withholding; however they may be subject to backup withholding.
Payments that may be subject to "backup withholding" include interest, dividends,
rents, royalties, payments for work you do as an independent contractor, and
broker payments. Under the backup withholding rules, the business or bank
must withhold on a payment if:
- You have not given the payer your taxpayer identification number in the
required manner,
- The IRS has notified the payer that the taxpayer identification number
you provided is incorrect.
- The IRS has notified the payer to start withholding on interest and dividends
because you had not reported all of your interest or dividend income in prior
years; or
- You have not certified that you were not subject to backup withholding
on interest and dividends.
Payers who withhold income tax under the backup withholding rules must
show the tax withheld on a Form 1099. You should report the amount
of tax withheld in the payments section of your Form 1040 (PDF), or Form 1040A (PDF). The payer must
send you the Form 1099 by January 31. If you have not received it by then,
contact the bank or business that made payments to you.
More detailed information on the backup withholding rules can be found
in Publication 1281 (PDF), which also includes
the procedures for payers, and in Publication 505, Tax Withholding
and Estimated Tax.
Page Last Reviewed or Updated: December 22, 2008
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