"Tax Withheld" from checking in tiny denominations
For many months now (thought it was a bank thing and am reallizing I'm wrong), my bank account has been subtracting minimal amounts with the description "tax withheld." This last month it took out 2 cents. To compare, my interest gained was 7 cents.
My bank said to contact the IRS but I have no idea which department/who to talk to — does anyone know why this might be happening? To my knowledge we do not owe any money to the IRS and have gotten refunds the last few years.
That seems rather vague and even deliberately unhelpful coming from your bank. I expect and demand more from an institution I trust with my money and investments. When I am dissatisfied with information received or an attitude of dismissal by a bank rep, I go over that person to the next person.
Is this something the bank is forced to do for everyone, in which case they should be able to explain themselves and point you to published information on the subject, or was it imposed by the IRS specifically against you, in which case the bank would have received something official instructing them to extract these payments (although .02 suggests that isn't the case). I'd want to see that, if only to get the details to enable me to follow up.
I would be all over that bank and working my way up the chain of command until I found someone with more helpful information than just "contact the IRS".
This same thing happens on my husband's checking account. The IRS does tax withholding on the interest earned on the account. So if his account earns six cents one month, the IRS withholds two cents. This applies to my husband because he's a foreign national. Not sure why your bank is doing that but I think you can call the IRS customer service #
Interest earned is taxable but I've always just gotten a 1099-INT form in Jan/Feb so I can report it as income. There is a reporting threshold - IIRC it's $10.
Do you have some other sort of taxable account with that same bank? I'm wondering whether at some point you asked to have witholding set up for a different account and they decided to apply it to all accounts.
Regardless you should be getting a more satisfactory answer from them. If you don't it might be worth shopping around for a different bank. To my knowledge you have to authorize any witholding (other than like court ordered alimony or something like that) from your paycheck/accounts so they should have a witholding authorization form on file that they can produce.