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  1. #1
    Join Date
    Sep 2016
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    Default Can an Independent Contractor Stop a Client from Withholding Taxes

    If you're working as an independent contractor, can a client withhold money from its payments to you without your consent? The client claims that it needs to withhold the money for the independent contractor's taxes.

  2. #2
    Join Date
    Sep 2005
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    Default Re: Can an Independent Contractor Stop a Client from Withholding Taxes

    If the independent contractor is the subject of backup withholding, then the IRS mandates that the client withhold 28% of compensation until the problem that triggered the backup withholding order is resolved. There may be a similar state requirement.

    If the independent contractor is not the subject of backup withholding, the worker may insist upon being paid in full so that he can pay his own taxes. If the client refuses, the independent contractor can consider stopping work for that client. If the independent contractor continues to work for the client, they should make sure that the money is actually being paid to the IRS, as otherwise they may find at the end of the year that their client did not in fact fully pay them -- or, worse, that they reported full pay to the IRS while pocketing a significant percentage of the money that they purportedly withheld as taxes.

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