Backup withholding is a tax levied on investment income as an investor withdraws it. It essentially helps agencies such as the IRS to be able to collect income taxes owed to them from investors' earnings. Most likely, if you are subject to backup withholding, you would have been previously notified by the applicable taxing authority, so if it sounds unfamiliar, it’s unlikely it applies to you.
Modified on: Mon, 15 Mar, 2021 at 8:53 AM
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