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What is backup withholding tax?

April 26, 2017backup tax withholding

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What is backup withholding tax?

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Backup withholding payments can apply to most payments that are reported on an IRS Form 1099. These can include interest payments and payments by brokers, as well as royalty payments. Other payments may include dividends, patronage dividends if at least half the payment is in money, rents, and profits. Commissions, fees, or payments for work undertaken as an independent contractor may also be liable to backup withholding.