Tax Tip #312
Backup Withholding
Rule of thumb – unlike with employees, no tax withholding is required for independent contractors. However, when a contractor fails to provide a correct SSN or EIN, or doesn’t properly complete Form W-9, Request for Taxpayer Identification Number and Certification, then withholding is required.
What is the required percentage of withholding?
- A) 2%
- B) 9%
- C) 20%
- D) 21%
- E) 23%
- F) 24%
- G) 42%
- H) 46%
For the Yankee fans out there, the answer is Tino or Rickey or Cano. For everyone else, letter F.
When required, you must withhold 24% from payments to the contractor and remit those funds to the IRS using Form 945, Annual Return of Withheld Federal Income Tax. The withheld amount must also be reported on the appropriate Form 1099.
Not sure whether backup withholding applies or need assistance with submitting the withholding to the IRS? Reach out to a team member.



