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. 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.