New Tax Law Changes Backup Withholding Rate
October 18, 2018
The Tax Cuts and Jobs Act reduced the backup withholding tax rate to 24 percent. When it applies, backup withholding requires a payer to withhold tax from payments not otherwise subject to withholding.
Payments subject to backup withholding include:
Payments subject to backup withholding include:
- Interest payments
- Dividends
- Patronage dividends, but only if at least half of the payment is in money
- Rents, profits or other income
- Commissions, fees or other payments for work performed as an independent contractor
- Payments by brokers and barter exchange transactions
- Payments by fishing boat operators, but only the portion that's in money and represents a share of the proceeds of the catch
- Payment card and third-party network transactions
- Royalty payments
