1099- M/ With-holding Taxes

[TheGoodnShawn]

A friend of mine has a group of contractors receiving a 1099-M. I know on the form on line 4, has a box for Federal Taxes Withheld, and Line 16 for state taxes with-held.

Her contractors want to have taxes taken out of their salary. What steps does she or the contractors have to do, to have this done?

I told her I would ask, I don't do book- keeping

Thanks


Shawn

[Jesse]

Why do they want the Federal Tax withheld? Are they actually subcontractors or are they really employees? My thoughts are the subs should send in there own estimated tax payments it is not the responsibility of the Payee.

When federal tax is withheld on a 1099MISC it is normally because they are subject to backup withholding and IRS is requiring the payee to withhold 28%.

I'm sorry I didn't directly answer your questions, but I would not withhold money from a subcontractor unless required to do so by IRS or the refusal from them to fill out and sign the W-9 with a SS# or Fed ID#.

[Brad Imsdahl]

The instructions for Form 1099-MISC say the following:

"Box 4. Federal Income Tax Withheld
Enter backup withholding. For example, persons who have not
furnished their TIN to you are subject to withholding at a 28%
rate on payments required to be reported in boxes 1, 2 (net of
severance taxes), 3, 5 (to the extent paid in cash), 6, 7 (except
fish purchases for cash), 8, 10, and 14. For more information on
backup withholding, see the 2006 General Instructions for
Forms 1099, 1098, 5498, and W-2G.
Also enter any income tax withheld from payments to
members of Indian tribes from the net revenues of class II or
class III gaming activities conducted or licensed by the tribes."

Note that in these instructions, there is no mention of the payee having the option to withhold taxes on the 1099, other than the backup withholding requirements and the Indian tribe rule.

If the subs want withholding, they either have to be employees, or they should refuse to furnish SSNs so the payee is required to withhold at 28%.

[TheGoodnShawn]

Thanks

Wow, Thanks Brad and Jesse! I appreciate that


Everyone have a good day


Shawn