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Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2390
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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I reported an incorrect SSN on W2 which is now reflected on

Customer Question

I reported an incorrect SSN on W2 which is now reflected on my 1099, instead of correcting that, I would like to pay the IRS backup withholding which is 28% of the income I had made... The income was about 2000$.
Submitted: 1 month ago.
Category: Tax
Customer: replied 1 month ago.
How do I go about doing that?
Expert:  Anne replied 1 month ago.

Hi

I'm Anne & I've been preparing taxes for 28 years. I'm reviewing your question now, and will post back with your reply momentarily.

Expert:  Anne replied 1 month ago.

Did you have an incorrect SS# ***** a W2? or a 1099? Are you asking about how to send 28% to IRS for W2 or 1099?

Customer: replied 1 month ago.
I apologize for the confusion. I have an incorrect SSN on 1099 as a result of a typo perhaps. I recall submitting the correct SSN on the W9. However, I would not like to resubmit my SSN or give a copy, I have heard from several people that my company has handled SSNs carelessly in the past. I would like to pay the backup withholding instead of giving away my SSN. How do I go about doing that?
Expert:  Anne replied 1 month ago.

There is no way to withhold any tax for a 1099. What you need to do is calculate the 28%, and send a check to the IRS with that $ amount, and the SS# ***** you want the payment applied to, along with the memo "Federal Estimate for 2016.

I would be remiss if I didn't tell you that you really need to correct the SS#. If you don't, then you could possibly be applying that payment to another individual, which brings the whole matter of possible fraud into play.

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Customer: replied 1 month ago.
Well, the whole point of backup withholding is if an SSN is not provided... So why would I need to give my SS#? Can I simply send them the 1099, a check worth 28% of the income and a statement that I would not like to release my SSN for fear of it being misused?
Expert:  Anne replied 1 month ago.

I really want to help you, but I'm afraid I don't totally understand your hesitancy to use your SS#

By using a SS# ***** is not yours, you are putting the individual who actually owns that # at risk. I don't mean to sound mean here, so please take this the way it is intended, but you are now perpetuating fraud by using a SS# ***** assigned to you.

Even if you there wasn't a SS#, the IRS has to know WHO to apply the withholding to. Normally that means an ITIN number at the very least.....please see below

https://www.irs.gov/taxtopics/tc307.html

Please let me know.

Customer: replied 1 month ago.
I have a close friend who is a victim of identity theft and I make every attempt to not reveal my personal information whenever possible.Please correct me if my understanding is wrong from the following.As per this article: http://quickbooks.intuit.com/r/taxes/backup-withholding-small-business-owners/, a business must begin backup withholding if an employee either doesn't give the correct ITIN/Name combination or fails to fill out the W9 as a whole. In my case, my employer was negligent to verify my ITIN/Name combination on the W9. Now, instead of correcting the ITIN on the W9 (or 1099), can I send a check of the correct dollar amount (28% of my earnings) to my employer, asking them to pay the IRS and refuse to provide my SSN? Or, can I send the check directly to the IRS and tell them that there was a mistake in entering the SSN and that I would like to remain anonymous?I'm no longer working with the company; so, correcting the ITIN has no benefit for me for future years - I'm only concerned about this year...
Expert:  Anne replied 1 month ago.

I'm afraid that you are slightly mistaken.

Backup withholding is for Non Resident Aliens only, which is why there is the reference to ITIN #'s. If you have a SS#, your employer should not withhold the 28%, and you can send the 28% to the IRS with the explanation that I provided before....."2016 Estimate"

Expert:  Anne replied 1 month ago.

Backup withholding is really for Non Resident Aliens only, which is why there is the reference to ITIN #'s. If you have a SS#, your employer should not withhold the 28%, and the only way you can send the 28% to the IRS is the way I noted above, with the explanation ...."2016 Estimate"

Customer: replied 1 month ago.
That's not true. Backup withholding is not for Non-Resident Aliens only. Here's an IRS website stating the same: https://www.irs.gov/taxtopics/tc307.html
Expert:  Anne replied 1 month ago.

I know it can be confusing, but the first 3 words are "When it applies:......."

If you read farther, it speaks about an incorrect Taxpayer Identification number (TIN) or Individual Taxpyer Number (ITIN), NOT a SS#

This is all a moot point anyway, since any withholding that would be sent to the IRS now would be for tax year 2017 anyway.

I still can't in all good conscious tell you to continue to use the incorrect SS# ***** doing so you are perpetuating fraud against whoever owns the SS# ***** you have, which is what you are most concerned about happening to you

Customer: replied 1 month ago.
I really wish with the technology these days, there is more secure way of asking for SSNs such as using secured servers.The statement: "...The IRS notifies the payer that the TIN you gave is incorrect" clearly means that anyone that has given an incorrect TIN (SSN, EIN or ITIN) may be subject to backup withholding. Well, this discussion may be made publicly available and it is important to put accurate information out there for the sake of everyone.Regarding tax fraud against someone else, from what I read, the first step IRS takes when it receives a 1099 is do a TIN/Name verification: https://www.irs.gov/pub/irs-pdf/p2108a.pdf. In my case, my name is ***** *****; however, the SSN is not correct. Therefore, I'm assuming come February, I'll get a letter to correct the SSN. However, since I don't work with the company anymore, I do not really want to do that for fear that the company might be careless with my information.About tax evasion, I'm really not trying to evade, I want to pay taxes but in a secure fashion that doesn't jeopardize my future. The way I see it, I want to the following:i) Prepare a letter letting the IRS know about the accident of the clerical error. Explain to them about identity breach with big shots like Yahoo! and Uber and tell them that I do not want to risk giving my employer a copy of my SSN. I therefore choose to pay the backup withholding instead of correcting my SSN.
ii) Along with the letter, I plan to write a check worth 28% of my earnings to my employer, asking my employer to send the same amount to IRS. I don't know if IRS will accept this.
iii) Send a copy to IRS so they are aware that I'm not trying to evade taxes.Do you think that is a good idea?
Expert:  Anne replied 1 month ago.

Normally, the payer (company) is charged with making that change by submitting a corrected 1099.Any letters that you would prepare is something the IRS won't look at right away. During tax season, they look at forms....so the quickest way to take care of this is to have the company correct the 1099, which is something you don't want to do for fear of how they might handle your information.

I don't think that you actually have the INTENT to fraud or evade, but you have to know that the IRS will be looking for whoever's SS # is on that 1099 to report the income. They can hold that person's refund if they have one, and come after them for understating their income. So again, you're putting someone else through everything you are trying to stop for you

I have attached information from the IRS re: when backup withholding is required, and again, it is required for people who have TIN and NOT for those with SS#. This means that you are not subject to the 28% back up withholding....and since you aren't willing to have the company correct their records so that your income is under the correct SS#, I'm confused as to why you would want the company to pay in the 28%. This 28% gets added on to your 1099 as part of your Misc income on the 1099 you will receive, so if you had $10,000 in Misc income, and the company sent in the 28%, your 1099 would show $12800 in income with $2800 as your backup withholding.

Again, I'm confused by your insistence at having the employer send this withholding in for you. It has missed the deadline for tax year 2016, so it would only count for 2017, and you stated that you no longer work there.

I'm happy to help you, but I'm not entirely sure where you want to go with this.

Here's the attachment I mentioned:

https://www.irs.gov/government-entities/federal-state-local-governments/backup-withholding

Customer: replied 1 month ago.
I understand what happens normally, I just wanted to take the initiative so that it can be done in the most secure manner.Your statement "...it is required for people who have TIN and NOT for those with SS#." is incorrect. A SSN is a TIN, there are other types of TINs. Here's an article from the government website: https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin. Again, backup withholding is levied upon anyone that fails to submit a TIN (EIN, SSN, ITIN etc.) in the required manner.I understand your concern about potentially causing problems to another person with the incorrect SSN I submitted. However, I do not think the concern completely valid. The IRS computers do a TIN/Name validation BEFORE crediting an SSN with the income from the 1099. Here's a link explaining the same program: https://www.irs.gov/government-entities/indian-tribal-governments/taxpayer-identification-number-tin-on-line-matching-1. If this were not in place, it would be disastrous as 1099s are prepared by humans and are DEFINITELY prone to clerical errors.I don't think my understanding of backup withholding is the same as yours. My understanding is as follows. If I made $ 10,000 in 2016 working with Company A and I failed to submit my SSN in the required manner; then, I'm subject to a 28% tax withholding, i.e. I only receive $ 7,200 and the $ 2,800 is listed as Income Tax withheld on the same 1099 (if it was indeed withheld). In my case, because the company had not withheld the $ 2,800, I intend to send the IRS the same amount without revealing my TIN (in my case, SSN).