What is withholding Tax?

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  • Anonymous
    1 decade ago
    Favorite Answer

    These are trust fund taxes, deducted from the salary of employees and (as to certain elements, namely social security and unemployment tax, matched by the employer) and paid over to the tax authorities.

    Such taxes exist in the vast marjority of countries.

    While withheld from the employee, the tax is subject to final assessment at the end of the tax year (Dec. 31 in most countries; Apr. 5 in the United Kingdom, where withholding tax is known as PAYE = Pay As You Earn).

    After the filing of a declaration by the taxpayer (if required) and assessment of tax by the government, the withholding tax (combined with any estimated tax instalments paid by the taxpayer) is credited against the final tax due.

  • 1 decade ago

    Definition

    An amount of an employee's income that an employer sends directly to the federal, state, or local tax authority as partial payment of that individual's tax liability for the year. When a person starts a new job, he/she is required to fill out a W-4 form on which he/she can indicate his/her filing status and the number of allowances he/she is claiming. also called withholding.

  • 1 decade ago

    By law, employers must withhold reasonable Social Security and Income taxes from employees' paychecks and remit them to the government.

    Employers do all this without being paid a dime by the government.

    If workers' don't have enough withheld from their checks, they will have to pay more when they file their tax returns. IF they overwithhold, they may be eligible for a refund.

    Source(s): www.irs.gov
  • 1 decade ago

    Okay simple, the taxes you pay every time you get your paychek is witholding. This amount reduces your taxes owe at the end of the year; in some cases it can help you get a refund.

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