IRS Tax Tip 2020-08, January 27, 2020
Some businesses and other payers take out backup withholding from payments they make to certain people. These entities should remember their upcoming filing deadlines.
Description of backup withholding
The person or business paying the taxpayer doesn't generally withhold taxes from certain payments. They don't do this because it's assumed the taxpayer will report and pay taxes on this income when they file their federal tax return. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income. This is what's known as backup withholding. If a payer does backup withholding, they are required to deposit that withholding on those payments with the IRS.
Form 945, Annual Return of Withheld Federal Income Tax
Businesses and other payers must report backup withholding and any other federal income tax withheld from nonpayroll payments on Form 945. The deadline for filing Form 945 for tax year 2019 is Friday, January 31, 2020. However, if the payer made deposits on time and in full, the deadline is Monday, February 10, 2020.
The information returns listed below are used to report backup withholding for tax year 2019. They're generally due to the IRS on Friday, February 28, 2020, for paper filers and Tuesday, March 31, 2020, for electronic filers.
These information returns are:
- Form 1099-B, Proceeds from Broker and Barter Exchange Transactions (PDF)
- Form 1099-DIV, Dividends and Distributions (PDF)
- Form 1099-G, Certain Government Payment (PDF)
- Form 1099-INT, Interest Income (PDF)
- Form 1099-K, Payment Card and Third-Party Network Transactions (PDF)
- Form 1099-MISC, Miscellaneous Income (PDF)
- Form 1099-OID, Original Issue Discount (PDF)
- Form 1099-PATR, Taxable Distributions Received from Cooperatives (PDF)
- Form W-2G, Certain Gambling Winnings (PDF)
1099-MISC and nonemployee compensation
There's a different filing due date for Form 1099-MISC when reporting nonemployee compensation. When this form is used to report this in box 7 of the 1099-MISC, it's due to the IRS by January 31. This due date applies whether the payer is submitting the form on paper or electronically.
Because of this, it's important for people to remember a Form 1099-MISC has two possible due dates when filed electronically:
- Friday, January 31 to report nonemployee compensation payments
- Tuesday, March 31 to report all other payments
When filing 1099-MISC, the payer should separate the transmission (PDF) of nonemployee compensation from other payments.
Information return filing extensions
A payer can request a 30-day extension to file any of the information returns listed above by filing Form 8809, Application for Extension of Time to File Information Returns (PDF) . An extension is usually granted automatically.
However, the IRS does not automatically grant an extension for someone filing Form 1099-MISC reporting nonemployee compensation payments. Payers who need a 30-day extension to file this form must meet one of the criteria listed on line 7 of Form 8809 (PDF) .