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#1771774 - 01/02/13 10:05 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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So it looks like the "deal" changed them all back to whatever they were in 2012, except for the folks at the top of the income heap.
John the Social Security witholding taxes rates were raised (cuts were no longer extended) for all of us working stiffs 2%.
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#1771815 - 01/03/13 01:18 AM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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Yup.
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#1771835 - 01/03/13 01:12 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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I'm going to keep it at 31% until the IRS publishes a final notice to the contrary.
Unless I'm totally missing something, which is highly possible, what are the income thresholds for the following changes? It doesn't seem to me that these changes are only effecting the consumers that make over $400k.
"HIGH-INCOME TAXPAYERS.— (1) INCOME TAX RATES.— (A) TREATMENT OF 25-, 28-, AND 33-PERCENT RATE BRACKETS.—Paragraph (2) of section 1(i) is amended to read as follows: (2) 25-, 28-, AND 33-PERCENT RATE BRACKETS.—The tables under subsections (a), (b), (c), (d), and (e) shall be applied— (A) by substituting ‘25%’ for ‘28%’ each place it appears (before the application of subparagraph (B)), (B) by substituting ‘28%’ for ‘31%’ each place it appears, and (C) by substituting ‘33%’ for ‘36%’ each place it appears.’’.
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#1772177 - 01/03/13 07:31 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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FYI, the IRS just posted the following regarding changes to the income tax withholding tables: http://www.irs.gov/uac/Newsroom/IRS-Provides-Updated-Withholding-Guidance-for-2013Unfortunately these changes do not coincide with the excerpt from the Fiscal Cliff deal that I provided in my earlier post. For example, per the fiscal cliff 28% was to be substituted with 31% however I see no reference to 31% in the withholding tables. So basically I still have the same core issue/questions 1. Should I change the backup withholding rate to 31% based on Publication 1335 or leave it a 28% since the fourth income bracket per the 2013 withholding rate tables is still 28? 2. How does what is stated regarding the substitutions listed in the Fiscal cliff deal come into play? Is is possible that the 2013 Withholding rates on the IRS website are incorrect?
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#1772179 - 01/03/13 07:34 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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Maybe I'm just totally missing something...but lvc, it seems you are interpreting this backwards. It says (above) to subsitute 28% for 31%...not 31% for 28%. Is that, perhaps, what is throwing you off? (no pun intended!  )
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#1772186 - 01/03/13 07:42 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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Those are payroll withholding tables and have nothing to do with backup withholding.
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#1772197 - 01/03/13 07:57 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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from the website it has not been updated since the rate expired in 2011 (if they did not post for last year, what makes us think we will have a quick answer) Backup Withholding Program ("B" and " C" Programs) Overview 1.There are two separate Backup Withholding (BWH) programs that require payers to withhold at the backup withholding rate from recipients’ (payees’) payment of Form 1099 income. 2.The backup withholding rate is 28% for payments made after December 31, 2002. This new rate expires December 31, 2010. http://www.irs.gov/irm/part5/irm_05-019-003r.html
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#1772204 - 01/03/13 08:04 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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Please forgive my ignorance...but if I'm not mistaken, they had already updated the tables to the old rates that should have gone back into effect had the 'deal' not been signed. All they are doing is putting it back where it was for the last couple or so years. SO, it's not changing from 28 to 31...it's changint the 31 back to 28.
As far as actual backup withholding (as opposed to payroll)...I don't think that's really known yet.
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#1772212 - 01/03/13 08:10 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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I would hope that everyone has something better to do then argue all day on this subject that probably impacts .000001% of all accounts. I would just wait for IRS clarification.
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#1772214 - 01/03/13 08:13 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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As far as actual backup withholding (as opposed to payroll)...I don't think that's really known yet.
That is correct, they did not even post the amounts for 2011 in their overview yet alone 2012 or 2013.
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#1772452 - 01/04/13 03:00 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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Cape Cod
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Amen to Randy. There are a lot more important fish to fry right now, although I appreciate that setting the backup withholding rate is probably an annual start-of-year checklist item for many operations folks.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#1778113 - 01/18/13 08:06 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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Joined: Jan 2004
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Alaska
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How many of you have gone ahead and changed your backup withholding rate to 31%?
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#1778321 - 01/21/13 09:56 AM
Re: Fiscal Cliff Deal-Backup Withholding Rate
NeverEndingSupport
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The most efficient and effective "compliance" technique is to refuse to maintain interest bearing accounts for people who are subject to backup withholding.
This wasn't a cost efficient method for collecting taxes when we were paying 5% interest. Today, it's simply ridiculous; e.g. 31% of .50%?
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#1790572 - 03/01/13 04:42 PM
Re: Fiscal Cliff Deal-Backup Withholding Rate
lucyc
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Gold Star
Joined: Nov 2000
Posts: 489
KY
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Instructions for 2013 Forms 1099-INT and 1099-OID posted to the IRS web-site yesterday. http://www.irs.gov/pub/irs-pdf/i1099int.pdfBox 4. Federal Income Tax Withheld Enter backup withholding. For example, if a recipient does not furnish its TIN to you in the manner required, you must backup withhold at a 28% rate on payments required to be reported in box 1 (which may be reduced by the amount reported in box 2), box 3, and box 8 on this form. The other related publications (505, 1281, 1335) have not yet been updated with the current rate which did not change from last year.
Last edited by StevenD; 03/01/13 04:46 PM.
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