What is Backup Withholding and can I avoid it?

Please consult with your tax advisor for tax advice. 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 Taxpayer Identification Number (TIN). 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. You can do this by completing and signing 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 an 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 per depositor, per insured bank, per ownership category.

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* 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. Interest Rate and APY of a Certificate of Deposit account is fixed once the account is funded. [There is no minimum balance required to open your Account, to avoid being charged a fee, or to obtain the Annual Percentage Yield (APY) disclosed to you]

 

** The national rate referenced is from the FDIC's published Monthly Rate Cap Information for Savings deposit products. Visit the FDIC website for details.

 

1 There is no minimum balance required to open your Account, to avoid being charged a fee, or obtain the Annual Percentage Yield (APY) disclosed to you.

 

2 The interest rate and Annual Percentage Yield (APY) will be disclosed in your account-opening documents, which you will receive after funding your Account. The interest rate and APY for your CD will be fixed and will either be (i) the rate reflected at application submission or (ii) the rate being offered when your CD is funded, whichever is higher. All CDs must be funded within 60 calendar days from the time we approve your application or will be subject to closure. After the CD is opened, additional deposits 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 Consumer Deposit Account Agreement and Savings Schedules for additional information.

 

3 For purposes of transferring funds to or from an external bank, 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 processing on the next business day. Funds deposited into your account may be subject to holds. See the Funds Availability section of your Consumer Deposit Account Agreement and Savings Schedules for more information.

 

4 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.

 

5 IRA Contributions are subject to aggregate annual limits across all IRA plans held at American Express or other institutions. IRA distributions may be taxed and subject to penalties based on IRS guidelines. Required minimum distribution, if applicable, is only relevant to this IRA plan and does not take into consideration other IRA plans held at American Express or other institutions. Please see IRS.gov for more information. We recommend you consult with a financial or tax advisor when making contributions to and distributions from an IRA plan account.