Are royalty payments taxed at a higher tax rate than payments for services?


According to IRS Publication 1281—Backup Withholding for Missing and Incorrect Name/TIN(s), the backup withholding rate (U.S. persons) is 28%.

Actual tax rates vary by individual taxpayer depending on their tax bracket, but the backup withholding rate is the same for all withhold-able payments. For foreign payees, the withholding rate is 30%.

Also see TAPN’s Backup Withholding Summary Rates.

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