Backup Withholding Calculator 2026 — IRC §3406 (24%)
Calculate 24% backup withholding on 1099 payments. Determine withholding owed, payee net amount, IRS deposit deadlines, and track multiple payees for Form 945 reporting.
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Backup Withholding (24%)
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Net Payment to Payee
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Withholding Required?
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Form 945 Deposit Due
Backup Withholding Analysis
Backup Withholding — Key Rules for Payers
Under IRC §3406, payers must withhold 24% from certain 1099 payments when the payee's TIN is missing, incorrect, or the IRS has issued a withholding notice.
When to Start and Stop
Start withholding immediately when:
• Payee does not provide TIN before payment
• IRS B-Notice (CP2100) received — 30 days to correct
• IRS C-Notice received — start immediately
Stop withholding when:
• Payee provides correct certified TIN (W-9) after First B-Notice
• IRS issues release after C-Notice compliance
• Payee verifies TIN with SSA after Second B-Notice
• Payee does not provide TIN before payment
• IRS B-Notice (CP2100) received — 30 days to correct
• IRS C-Notice received — start immediately
Stop withholding when:
• Payee provides correct certified TIN (W-9) after First B-Notice
• IRS issues release after C-Notice compliance
• Payee verifies TIN with SSA after Second B-Notice
Sources and References (click to expand)
Extended
Multi-Payee Backup Withholding Tracker + Form 945 Calculator
Track multiple payees, aggregate withholding by payment type, calculate Form 945 deposit schedule, and view bar chart of withholding by type
Track backup withholding across multiple payees for Form 945 reporting.
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| Payee | Type | Payment | TIN | Withholding (24%) | Net to Payee |
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No payees added. Add payees above to track withholding.
Backup withholding amounts by payment type across all tracked payees.
Calculate Form 945 annual deposit schedule based on total backup withholding liability.
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Frequently Asked Questions
What is backup withholding and what rate applies in 2026?
Backup withholding is a federal tax withholding mechanism that applies to certain payments when the payee fails to provide a correct Taxpayer Identification Number (TIN) or when the IRS notifies the payer to begin withholding. The backup withholding rate is 24% for 2026 (same as 2018 and forward under TCJA). It applies to payments including interest, dividends, broker proceeds, royalties, rents, non-employee compensation (1099-NEC), gambling winnings in some cases, and other 1099-reportable payments. Payers must deposit backup withholding on Form 945 (Annual Return of Withheld Federal Income Tax), not Form 941.
What triggers backup withholding — what is a B-notice and C-notice?
Backup withholding is triggered by: (1) Missing TIN — payee fails to provide a Social Security Number or EIN. (2) B-Notice (CP2100) — the IRS notifies the payer that the TIN/name combination on the 1099 does not match IRS records. The payer must send a First B-Notice to the payee and start withholding if no corrected TIN is received within 30 days. A Second B-Notice within 3 years requires the payee to certify their TIN through the Social Security Administration. (3) C-Notice — the payee has under-reported income or failed to report interest/dividend income and the IRS issues a backup withholding notification. The payer must immediately begin withholding until the IRS releases the payee.
Which types of payments are exempt from backup withholding?
Backup withholding does NOT apply to: wages (covered by regular withholding on W-2), real estate transactions, cancelled debt (1099-C), long-term care benefits, unemployment compensation, state/local income tax refunds, IRA or pension distributions, and payments to corporations (except attorneys and medical payments). A payee who provides Form W-9 with a correct certified TIN is generally not subject to backup withholding. Foreign persons use Form W-8BEN to claim exemption from backup withholding under the NRA withholding rules.
How does a payer deposit backup withholding and when is Form 945 due?
Backup withholding is deposited under the same rules as income tax withholding on wages — either monthly or semi-weekly based on the lookback period. However, it is reported on Form 945 (not Form 941). Form 945 is due January 31 of the following year (e.g., 2026 withholding is due January 31, 2027). If all taxes were deposited timely, the deadline extends to February 10. Lookback period for Form 945 is different: the total backup withholding for 2024 determines the 2026 deposit schedule. Monthly depositors pay by the 15th of the following month; semi-weekly depositors follow the same W/F rule as Form 941.
Can a payee avoid backup withholding after receiving a B-notice?
Yes, but the process differs for first vs second B-notices. For a First B-Notice: the payee has 30 business days to provide a corrected TIN on a new Form W-9. If they provide a valid TIN, the payer stops withholding. For a Second B-Notice (within 3 years of first): the payee must verify their TIN directly with the Social Security Administration (individuals) or IRS (businesses) and provide the payer with documentation. Until proper documentation is received, 24% backup withholding must continue. Backup withholding cannot be stopped simply by providing an unverified TIN after a Second B-Notice.