Setting limits on voluntary withholding — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Setting limits on voluntary withholding

by on
in Office Management,Payroll Management

Question: A contractor would like us to voluntarily withhold her federal income taxes. Accounts Payable isn’t equipped to do this, so it’s fallen to Payroll. Having her complete a W-4 form seems inappropriate, since she’s not an employee. Can we honor her request?

Answer: No. There is no form of voluntary income tax withholding for independent contractors. Back-up withholding of an independent contractor’s federal income taxes is required when a payee fails to provide you with a Taxpayer Identification Number (TIN) prior to the first payment or you cycle into the IRS’ B notice program. If she provided her TIN to you before you pay her, you can’t withhold.

Leave a Comment