Withholding

Withholding means:
the retaining (“pay-as-you-earn” taxation) by an employer of a portion of an employee's wages for the purpose of paying for various taxes, insurance plans, pension plans, union dues, and other deductions.

Money, for example, that employers withhold from employees paychecks. This money is deposited for the government. (It will be credited against the employees' tax liability when they file their returns.) Employers withhold money for federal income taxes, Social Security taxes and state and local income taxes in some states and localities.

See Withholding Tax and Withholding Tax.

State Income Tax

Description and Definition of Withholding

The amount taken from your wages or other income to pay your income and social security taxes for the year. The amount withheld is based on the size of your salary and the Form W-4 you file with your employer. Taxes are most commonly withheld from wages, but they may also be withheld from other income, such as dividends and interest. Backup withholding from dividend or interest income is required if you do not provide the payer with a correct taxpayer identification number. Withholding on pensions and IRAs is automatic unless you elect to waive withholding. You are credited for these taxes when you file your return.

Resources

See Also

Further Reading

• Withholding in the West's Tax Law Dictionary
• Withholding in “A Dictionary of Taxation”