Finance Exam Prep

Ran Chen, EA, CFP®

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Enrolled Agent Exam [Part 1] 87, Backup Withholding Requirements

4/12/2026 • 3 min

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: • That backup withholding is a flat 24% rate applied to specific payments like interest, dividends, and nonemployee compensation. • How a missing or incorrect Taxpayer Identification Number (TIN) on Form W-9 is the most common trigger for backup withholding. • The process initiated by an IRS "B-Notice" when a payee's name and TIN on a Form 1099 do not match IRS records. • That backup withholding can also be required if the IRS notifies a payer that the payee has underreported interest or dividend income. • How to advise clients to stop backup withholding by providing a correct Form W-9 or resolving underreporting issues directly with the IRS. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or Youtube Channel: https://www.youtube.com/@Open-exam-prep

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