What is backup withholding?

 

Backup withholding is a type of withholding for federal income taxes on certain types of income. Backup withholding may be mandatory in certain circumstances. Most taxpayers, however, are exempt from backup withholding.

The IRS requires backup withholding if your name and Social Security number on Form W-9 does not match their records. They often require backup withholding if you owe federal income taxes, or if you have not reported all your interest, dividends, and other income on your tax returns.

The IRS will notify you if you are required to have backup withholding. They will also notify any payers if your name and Social Security do not match the IRS records.