What is the percentage rate for "backup withholding" in 2018?

The percentage rate for "backup withholding" in 2018 is indeed 28%. Backup withholding is a tax requirement that requires a payer to withhold a portion of certain payments made to a payee and remit that amount to the IRS. This rate is applied to payments such as interest, dividends, and certain other types of income when the payee has not provided a valid taxpayer identification number or is otherwise subject to backup withholding.

In 2018, the IRS set the backup withholding rate at 28%, aligning with the established threshold for instances where taxpayers are non-compliant or if the IRS has specifically instructed the payer to withhold. Understanding this rate is critical for payroll professionals as it impacts tax reporting and compliance processes.