Financial Institution Withholding

Question: Question about 1099-OID as it relates to "debt instrument"? If i issue a debt instrument and i have a interest in the face value of the instrument so for instance i issue a 1,000.00 debt instrument and i was paid 0 for it and the financial institution is withholding my 1,000.00 and will not return my property how would i go about declaring my withholding of my interest?

Answer: A 1099 is issued by the holder to the borrower, reporting interest paid to the holder by the borrower. Your question implies a rather unique relationship between you, the bank and the borrower - which is too confusing for me to comprehend.

Question: Help! Bank Account Problem Involving Netflix Free Trial Authorization...? I signed up for a netflix free trial with a debit card that goes to my account which has about a dollar in it at the moment. I read all the fine print presented in the trial disclosure and it clearly stated i wouldn't be charged, but after signing up I decided to look at their faq and came across this: Netflix makes no charge during your free trial. Upon registering for your free trial, your credit card or bank account will be authorized. Your credit card company or financial institution may temporarily withhold an amount equal to our regular monthly subscription rate from your credit limit or available balance at that time - it will be released by your credit-card company or financial institution within a few days. No charges will be made unless you do not cancel prior to the end of your free trial period. Please check with your financial institution for details on their policy on authorizations. ---- I don't have 20.00 for them to withhold! Will I get a fee?

Answer: It really depends upon your bank. Most banks don't charge a fee unless the netflix charge actually posts to your account. Just be sure you don't have any other charges come through while netflix has the hold on your funds, because then you likely will get charged.

Question: How can I best determine my status as employee or independent contractor? I am presently working for a contractor (LLC) who has deployed me at a financial institution. The contractor has defined my role as a "pass through sub-contractor". He is paying me upon his receipt of payment from financial institution (he also has some direct role with same institution). I only completed W-9 form with him prior to starting assignment, and he is not withholding anything from my check (i am receiving agreed upon hourly rate x hours worked). I began working in early October, and was anticipating paying estimated taxes quarterly in January? While I am deployed at financial institution, contracting individual has Further clarification of position: I am deployed at financial institution and working at their site. They are providing laptop, access to applications, security badge for building access and day-to-day materials (paper, printer, etc.). However, I feel that contractor (LLC) is point person for my role and schedule. There is no clear direct responsibility to anyone at financial institution. I signed agreement with contractor prior to starting engagement. Only defined terms of contract are hourly rate and that I would enter weekly hours on his web-based application.

Answer: to determine your status answer these question I buy? I pay for? If you can fill in these question with any items like paper, staples, note book, paperclips and have receipts then your a independent contractor if not he is responsible for your taxes that he did not take out and keep your receipts for the IRS to show what you purchase and why. They will need to see these to make the final decision.

Question: Am I really an "exempt payee" on the w-9? I've looked up about 10 different answers to this question and everyone says that generally, yes, sole proprietors should check exempt status if they have not been notified otherwise by the IRS. But the form says: "Generally, individuals (including sole proprietors) are not exempt from backup withholding. Corporations are exempt from backup withholding for certain payments, such as interest and dividends." And then it lists a bunch of specific exceptions, like financial institution, District of Columbia, real estate investment trust, or United States agency. But nothing that sounds like it applies to me at all. What is going on?? Ghost of Zeus, why does every single other answer I've found say that basically everyone is exempt?? Did you read my question? That was it.

Answer: The language is confusing. The law that established backup withholding included a list of entities (such as foreign governments or U.S. states) that could NEVER be subject to backup withholding, no matter how badly they behaved. These are exempt payees. For everybody else, you could be subject to backup withholding, but only if you did something wrong like failed to report income on your tax return or failed to pay your taxes AND, after you did this bad thing, the IRS notifies you that you are subject to backup withholding. By checking the box, you would be claiming that you are one of these special entities that could never be subjected to backup withholding under any circumstances. By not checking the box, you are not saying that IRS has notified you that backup withholding should commence. You are just saying that if in the future you violated the tax laws, there is a possibility that someday the IRS might be able to impose this sanction upon you. Not checking the box will not cause your payers to automatically start withholding taxes from you. That is because in Part II you certify that the IRS has not yet sent you a notice that they want to start backup withholding. Your payers will only start withholding taxes if you scratch out the statement in Part II that says that the IRS has not yet sent you a notice to start backup withholding.

Question: How will raising taxes improve our economy? A batch of economy-wide stats was released Friday morning, covering retail sales, industrial production, import prices, and consumer confidence. The verdict? It’s a 2 percent economy. Call it Goldilocks 2.0. Might the current financial turmoil throttle back growth a little more in the next six months? Yes, perhaps. Will there be some negative earnings surprises, especially from financial companies? Sure. But the bears would have us believe the sub-prime credit virus heralds the end of the world. They are wrong. Remember this: Our free-market capitalist economy is resilient and durable. It has proven time and again that it can take a punch. Sure, recession probabilities have increased. But so what? We’ve had virtually uninterrupted prosperity for twenty-five years, going back to the supply-side economy and technological boom launched by President Ronald Reagan. Since then, we’ve experienced 93 positive GDP quarters and only 5 negative ones. That makes for a truly phenomenal batting average. Consider this: Marginal tax rates are low. Inflation is low. Interest rates are low. And the world economy remains strong. The stock market — which I still believe is the best barometer of the health of business and the economic future — has behaved surprisingly well during this difficult stretch of turbulence. In fact, the sum total of the so-called “bear assault” is only a 4.5 percent correction from Dow 14,000 and other index peaks registered two months ago. Yes, profits are getting sloppy. And yes, there are some credit shocks out there yet to be revealed. However, the Federal Reserve will reduce the cost of money by bringing down its basic target rate on Tuesday. President Bush will veto any Democratic tax hikes. And at the margin, the Iraq War story is taking a turn for the better. Meanwhile, American entrepreneurs are still working hard. Speaking of next Tuesday, the best thing the Fed can do is deliver a big-bang, shock-and-awe rate cut that would bring the basic fed funds target 50 basis points lower to 4.75 percent. At the same time, it should lob a full percentage point off the discount lending rate, cutting it from 5.75 to 4.75 percent. This would be a confidence-inspiring move for all concerned: borrowers, lenders, businesses, consumers, and mortgage holders. Not only will slashing the cost of money add significant new liquidity to the economy, it will raise asset values across the board. The Fed also might think about setting up a special facility for non-bank lending institutions that are experiencing a liquidity squeeze. Perhaps also a temporary liquidity facility for commercial paper lenders. The asset-backed commercial paper market is vital to funding many of the daily operations of businesses across the country, and it’s this market that has been hardest hit. Such monetary front-loading would be very powerful, indeed. However, if the Fed goes small with only quarter-point reductions for fed funds and the discount rate, many investors will have an incentive to withhold money while they wait for interest rates to finally bottom at much lower levels later this year or next. In other words, a timid Fed action might actually prolong and deepen the economic slowdown. This is not a time for small-ball. It’s time for Bernanke and Company to go big. And let’s not forget that taxes are just as important as money. President Bush and Treasury man Henry Paulson should absolutely squash all the Washington rumors of tax hikes, in particular a cap-gains tax increase. If investors expect a hike in the cap-gains tax, they will have every incentive to launch a massive wave of stock market selling. Needless to say, this would be utterly calamitous for the whole economic picture. The animal spirits may have had their wings clipped a bit by the credit crunch, but with the right tax and money policies there is still plenty of sizzle and juice in this story. It’s very easy to be totally pessimistic and bearish right now, but that’s precisely why I will avoid falling into that trap. Optimists are winners. Pessimists are losers

Answer: Bill Clinton raised taxes (especially on the rich) when he inherited George Sr's. mess, and the economy rebounded beautifully, and he was the first president in decades to submit a BALANCED BUDGET !

Question: Will Obama's "new rules of the road" include a FULL audit of the Federal Reserve?? (where did that $2Tril go? http://www.bloomberg.com/apps/news?pid=2… Dec. 12 (Bloomberg) -- The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral. Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression. The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests. “If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, a senior managing director at New York-based ICP Capital LLC, which oversees $22 billion in assets. Edna..............tin foil?? really?? Good luck.

Answer: I'd like to think so, but I'm not holding my breath. HR 1207 has some 222 supporters on board now. I am anxious to see what happens here. And the Fed has way too much power. They need to go, or be strictly regulated. But by who? Or will it just end up being a case of the Rooster watching the hen house?