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From what I understand, "Subject to Backup Withholding" happens when you fill incorrectly a W-9 form, which I believe I've only filled once in my life for a part time job. I understand that this means that 28% of my earnings will be held, not really sure of how long.

I just turned 18 and I am asking this because of the following: I am filling a W-9 to submit an application to the App Store, but Apple asks if I am "Subject to Backup Withholding." I don't want to say I am exempt, but I also don't know if I am "Subject to Backup Withholding." How do I know what is my situation?

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Here is the text from the official IRS form W-9:

Under penalties of perjury, I certify that:

  1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me); and

  2. I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and

  3. I am a U.S. citizen or other U.S. person (defined below); and

  4. The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.

I don't think you are exempt from backup withholding (2a). You can see on page 3: "Generally, individuals (including sole proprietors) are not exempt from backup withholding."

Rather, you are not subject to backup withholding, because the IRS has never told you that you are subject to it (2b).

(Unless of course they have told you that you are subject to backup withholding, but if that were the case I assume you would already know about it.)

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  • I'm doing this now too. The issue is that there is no option for "not subject to backup withholding." You can only say "Exempt" or "Subject to backup withholding." I'm guessing the second is correct in most cases, but it makes it sound like Apple is going to (incorrectly) start withholding 20+% of earnings.
    – Freewalker
    Feb 15 '21 at 7:10
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If you don't even have a TIN yet (which is why you're filling out a W-9) then you aren't subject to backup withholding. Backup withholding only affects someone who already has other tax obligations.

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  • 1
    However, when I select I am exempt, I am asked to select 'Exempt payee code (if any)' or 'Exemption from FACTA reporting code (if any)' Do I just leave both blank?
    – Pablo
    Aug 18 '17 at 19:31

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