Banks or other businesses that pay you certain kinds of income must file Form 1099, an information return, with IRS. These payments generally are not subject to withholding, but a backup withholding rule may apply. Payments that may be subject to backup withholding include interest, dividends, rents, and payments for work you do as an independent contractor. Under the backup withholding rules, the business or bank must withhold 31% of the payments to you if:

1.You have not given the payer your taxpayer identification number in the required manner;

2.The IRS has notified the payer that you provided them with an incorrect identification number;

3.The IRS has notified the payer to start withholding because you had not reported all of your interest or dividend income; or

4.You had not certified, when required, that you were not subject to backup withholding for interest and dividends.

Payers who withhold income tax under the backup withholding rules must show the tax withheld on a Form 1099. You should receive this form from the payer by January 31st. If you have not received it by then, contact the bank or business that made payments to you. You should include the tax withheld on your Form 1040, Form 1040A or 1040 EZ.

For more information, refer to Publication 505, Tax Withholding and Estimated Tax.

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