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Fast facts to helps taxpayers understand backup withholding
Here's what taxpayers need to know about backup withholding.
Backup withholding is required on certain non-payroll amounts when certain conditions apply.
The payer making such payments to the payee doesn't generally withhold taxes, and the payees report and pay taxes on this income when they file their federal tax returns. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income.
Backup withholding is set at a specific percentage.
The current rate is 24 percent.Payments subject to backup withholding include:
Examples when the payer must deduct backup withholding:
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