Calculating tax if your income is subject to backup withholding.
If your income from a W-9 arrangement is subject to backup withholding, the current flat rate set by the IRS is 28%. So, to calculate how much you can expect to be withheld, simply multiply your W-9 income by 0.28.
For example, if the IRS determines that your dividend income is subject to backup withholding and you earn $1,000 in dividend income for 2016, you can expect $280 to be withheld by the IRS. Finally, it's important to note that if you do have money withheld from W-9 income as backup withholding, you should claim it as money withheld when you file your tax return. Even though the flat backup withholding rate is 28%, your actual tax liability may be more or less than this amount, and your tax return will determine if you are entitled to a refund, or if you need to pay more.
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