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What is Backup Withholding and can I avoid it?

Backup Withholding is federal income tax on the interest payments on deposits. It is withheld by a bank when it does not have the account holder's Social Security Number. This is a specified percentage paid to the IRS on most kinds of transactions reported on variants of Form 1099. American Express National Bank is required by law to withhold and remit to the IRS 24% of interest paid to your account under certain conditions.

To ensure accurate reporting on Form 1099-INT – and to avoid potential backup withholding – you should verify that your correct legal name and taxpayer identification number (TIN) are on file with American Express National Bank. This is easily done. Simply complete and sign the Request for Taxpayer Identification Number and Certification (Substitute Form W-9) contained in the application. Your TIN may be in one of the following forms:

• Your Social Security Number (SSN) – if the account is in your name and you are either a U.S. citizen or a permanent resident, or if you are otherwise eligible to receive a SSN from the Social Security Administration

• Your Individual Taxpayer Identification Number (ITIN) – if you are not eligible to receive a SSN from the Social Security Administration.

Accounts opened over the phone will be subject to backup withholding until American Express National Bank receives a completed and signed New Account Form. The New Account Form includes the Request for Taxpayer Identification Number and Certification (Substitute Form W-9) mentioned above.

Payments you receive will be subject to backup withholding if:

  1. You do not furnish your TIN to the requester;
  2. You do not certify your TIN when required;
  3. In certain instances, the IRS informs American Express National Bank that you furnished an incorrect TIN;
  4. The IRS informs you that you are subject to backup withholding because you did not report all your interest and dividends on your tax return (for reportable interest and dividends only); or
  5. You do not certify to American Express National Bank that you are not subject to backup withholding.

Download the New Account Form (Substitute Form W-9)

 


 

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Express National Bank. Member FDIC. Each depositor is insured to at least $250,000.

Learn More from FDIC.gov

*The Annual Percentage Yield (APY) as advertised is accurate as of . Interest rate and APY are subject to change at any time without notice before and after a High Yield Savings Account is opened.

 

For a CD account, rates are subject to change at any time without notice before the account is opened. Your rate will be fixed on the business day‡ we receive your completed application, provided we receive your deposit within 30 days after your application is approved. After a CD is opened, additional deposits to the account are not permitted. Early CD withdrawals may be subject to significant penalties which could cause you to lose some of your principal. Please see the Deposit Account Agreement for additional terms and conditions and Truth-in-Savings disclosures.

 

**The national average APY is accurate as of November 30, 2020, as published in the FDIC's Weekly National Rates and Rate Caps; average rate used is for deposits under $100,000.

 

†You may make up to nine (9) withdrawals or transfers out of your High Yield Savings Account during a monthly statement cycle. Read More in FAQs.

 

‡For purposes of transferring funds, business days are Monday through Friday, excluding holidays. Transfers can be initiated 24/7 via the website or phone, but any transfers initiated after 7:00 PM Eastern Time or on non-business days will begin to be processed on the next business day.

 

♢Calculations are estimates of expected interest earned. Actual results may vary, based on various factors such as leap years, timing of deposits, rounding, and variation in interest rates. The first recurring deposit is assumed to begin in the second period after any initial deposit.