Glossary A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | 1 | 3 | 4 | 5 Definitions by InvestorWords.com   What is...? backup withholding Tax withheld from investment income – such as interest, dividends, and gross proceeds – to ensure that tax is collected on the income. If an investor does not provide his or her financial institution with accurate reporting information (or does not have a Social Security number), the institution is required to withhold 28 percent of investment income. The IRS may also require that the financial institution withhold tax if the IRS determines that the investor has underreported investment income. Copyright ©2009 by InvestorGuide.com. All Rights Reserved.