is backup withholding a bad thing 
it could be a bad thing since it ties up money with the irs that could otherwise be used for investment purposes if you are subject to backup withholding however you may receive some of that money back as a tax refund who is exempt from backup withholding most american citizens are exempted from backup withholding so long as their tax identification number or social security number is on file with their broker and corresponds with their legal name retirement accounts and unemployment income are also exempted who is subject to backup withholding you may be subject to backup withholding if you are a foreign citizen or are an american who has not provided your correct tin ssn made the proper certifications or reported all your taxable interest and dividends on your tax return to the irs 4the bottom linethe irs imposes backup withholding on certain investment income to prevent tax shortfalls but the practice also ties up funds that could otherwise be invested thankfully most americans are exempted from backup withholding so long as a social security number or taxpayer id is on file and matches the personal information of the brokerage account holder 