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I've been rebuilding my credit with secured credit cards and my DH is interested in following suit. However I am concerned about the question asked in all secured apps as to whether you are subject to backup IRS withholding. I'm not exactly sure of the definition of that question, but hubby is concerned because he owes back federal taxes. Is this covered by that question and would a secured card be subject to some kind of withholding or garnishment?
I'm guess it would be, but not unsecured cards or store cards. Are my assumptions accurate? Just want to make sure I know how this works as opposed to guessing. A secured card could well be a waste of time for hubby while he still owes back taxes if that is the case. He also owes state tax and child support arrears which I think could also seek money from a secured card...
Hmmm. IRS is not currently garnishing or withholding but he has tax liens on his credit reports. Thinking he will need to hold off on a secured card.
Backup witholding is special witjholding of certain kinds of non-payroll income like interest from savings accounts. Backup witholding is a very specific process with IRS. If he hasn't been notified by IRS that he is subject to Backup Witholding he isn't.
While arrearages, liens. etc. might trigger backup witholding they don't automatically.
The IRS information is here:
http://www.irs.gov/taxtopics/tc307.html