I'm kind of new to this, I opened an account with scottrade to buy/sell stocks. I deposited $225 and kind of left it there for now. I just got a voicemail from scottrade saying that I've selected on my application that I want to backup holdings from the IRS and he said I need to contact him and let him know that I've done that or they might need to take taxes out. What does this mean?
2007-12-28 03:50:06 · 4 answers · asked by Ted R 1 in Business & Finance ➔ Taxes ➔ United States
On brokerage and bank account applications there is a checkbox for those whom the IRS has notified are subject to backup withholding. It sounds as though you checked that box accidently.
With the box checked, the brokerage firm must withhold taxes on your earnings, similar to the way employers hold taxes from your paycheck.
You should contact the brokerage to correct the problem.
2007-12-28 03:56:53 · answer #1 · answered by taxreff 7 · 0⤊ 0⤋
It means you didn't fill out a W-9.
Without the W-9, they are to withhold 28% of each transaction and send it to the IRS as income tax withholding.
To get credit for the money, you would attach your 1099 to your tax return.
2007-12-28 03:54:34 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Sounds interesting
2016-07-30 10:51:22 · answer #3 · answered by Anabel 3 · 0⤊ 0⤋
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2016-08-26 14:29:41 · answer #4 · answered by Anonymous · 0⤊ 0⤋