Unexpected withholding from ETF dividends

ByAmara5

Summary of User’s Issue and Solutions Discussed:

  • The main problem reported is that the user’s friend is experiencing unexpected backup withholding on transactions in their individual account, despite claiming they are not subject to it.
  • The IRS-mandated backup withholding could be triggered if the account owner indicated they were subject to it during account setup or if there is an issue with the SSN/Taxpayer ID Number (TIN) certification.
  • A mismatch between the name and the SSN/TIN—potentially due to typos or name changes—could also result in withholding.
  • The user is advised to have their friend contact Fidelity privately to investigate the issue further.
  • Fidelity provided links to resources that explain how to correct issues related to SSN/TIN certification.
Here’s the full thread
PleasantHistorian
04/18/2023 at 13:45:04 PDT
A friend sent me these transactions in his individual account. He said he isn’t subject to backup withholding and he doesn’t remember signing up for withholding. Any ideas what led to this? TAX WITHHELD as of 04/07/2023 ISHARES 0-5 YEAR TIPS BOND ETF (STIP) (Cash) TAX WITHHELD as of 04/07/2023 SHARES TR SHORT TREAS BD (SHV) (Cash) TAX WITHHELD as of 04/07/2023 ISHARES TREASURY FLOATING RA (TFLO) (Cash)
FidelityTaylor
04/18/2023 at 14:11:55 PDT
Hello, @PleasantHistorian! We appreciate you reaching out to us on behalf of your friend. IRS-mandated backup withholding may cause taxes to be withheld from sales proceeds and dividends. This could be because the account owner indicated they were subject to this at the account opening, or the SSN/Taxpayer ID Number (TIN) is not certified. If there is a mismatch between the name and the SSN/TIN, resulting from a possible typo or name change due to marriage or other reasons, it can cause a SSN/TIN to not be certified. In either case, have your friend reach out to us privately through another social media channel or through the link below so we can look into it further. Contact Us: https://www.fidelity.com/customer-service/contact-us This is also a good link to send to your friend that explains how to correct this situation more: https://www.fidelity.com/customer-service/how-to-update-ssn-tin
PleasantHistorian
04/18/2023 at 15:37:23 PDT
Thank you so much! I will pass this along
FidelityTaylor
04/18/2023 at 15:44:09 PDT
Sounds good @PleasantHistorian! Happy to help. 🟢

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