Tax news you can use....
We all went through the scramble of collecting the information to file 1099's in January.
As a refresher...Under the tax law, payers are responsible for knowing who they are paying.
To accomplish this, payers are required to collect the legal name and taxpayer identification number, or TIN, from vendors they pay. Generally, backup withholding is required when a service vendor does not provide the payer their TIN timely or accurately. This type of withholding can apply to most payments reported on certain Forms 1099 and W-2G.
To avoid the necessity of withholding on payments made to subcontractors it is important that you obtain a signed W-9 on US contractors and a W8BEN from foreign contractors. Otherwise the IRS will be looking to you for the statutory withholding amount which can range from 24 to 30% depending on who you are paying.
Written by John M Matras CPA
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