What Does Exempt From Backup Withholding Mean?
The Backup Withholding Tax is a 25% tax withheld by the IRS on certain payments made to certain individuals, in order to ensure that they pay their taxes. However, there are a number of payments and individuals that are exempt from this tax.
Exempt payments include:
-Interest on State and Local Government Obligations
-Interest on Tax-Exempt Obligations
-Dividends
-Mutual fund distributions
-Some payments made to corporations
-Payments for services performed by a non-resident …
