4 What entities are exempt from backup withholding?.3 Should I exempt from withholding or not?.2 How do you know if you’re exempt from backup withholding?.a middleman, such as a broker or a barter exchange, that is not a recipient of the payment a financial institution, including a depository institution, a regulated investment company, and a registered securities dealer an organization exempt from taxation under section 527 of the internal revenue code a religious organization that is exempt from taxation under section 501(d) of the internal revenue code a charitable organization, other than a private foundation, that is exempt from taxation under section 501(c)(3) of the internal revenue code a corporation or partnership that is exempt from taxation under section 501(a) of the internal revenue code a foreign government or any of its political subdivisions a state or political subdivision of a state government, its agencies and instrumentalities certain payments made to a foreign partner payments for services performed by a non-resident alien individual interest on state and local government obligations however, there are a number of payments and individuals that are exempt from this tax. A middleman, such as a broker or a barter exchange, that is not a recipient of the paymentīackup withholding is a 25% tax withheld by the IRS on certain payments made to certain individuals, in order to ensure that they pay their taxes. A financial institution, including a depository institution, a regulated investment company, and a registered securities dealer An organization exempt from taxation under Section 527 of the Internal Revenue Code A religious organization that is exempt from taxation under Section 501(d) of the Internal Revenue Code A charitable organization, other than a private foundation, that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code A corporation or partnership that is exempt from taxation under Section 501(a) of the Internal Revenue Code A foreign government or any of its political subdivisions A state or political subdivision of a state Government, its agencies and instrumentalities There are also a number of individuals who are exempt from backup withholding, including: Certain payments made to a foreign partner Payments for services performed by a non-resident alien individual Interest on State and Local Government Obligations However, there are a number of payments and individuals that are exempt from this tax. 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. What Does Exempt From Backup Withholding Mean?
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