Recent Examples of withholding tax from the Web
The tax agency historically has not gone after individual workers if their employer was at fault for not withholding taxes, specialists said.
For instance, if one spouse withholds taxes but the other pays, does filing separately at year's end afford any layer of protection to the paying spouse?
The comptroller’s office began withholding tax revenues from Harvey in February, as is required by law, after its police pension fund certified that the city was late in its pension payments.
To put tax cuts into workers’ pockets faster, U.S. officials have revised the tables that employers use to withhold taxes from paychecks.
That’s because paying the tax man as a gig worker isn’t as simple as for employees, whose bosses withhold taxes from their paychecks.
In April 2014, the partners began assessing a 1 percent employee-withholding tax and a 1 percent net-profits tax for businesses in township commercial areas on Wooster Pike, on Plainville Road and at Ridge Road and Highland Avenue.
Meaning, the shipping companies don’t withhold taxes or pay benefits.
Take time now to decide and allocate money needed for employee bonuses and withholding taxes.
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Financial Definition of WITHHOLDING TAX
What It Is
Withholding tax is an amount that employers withhold from an employee's paycheck and remit to local and federal taxing authorities on behalf of the employee.
How It Works
For example, let's say John Doe's salary is $24,000 a year. Though he makes $2,000 a month, he only brings home, say, $1,800 because his employer takes $200 out of his paycheck and remits it to the state and the federal government on his behalf. The payments go toward John Doe's federal income tax, state income tax, unemployment, and Medicare liabilities.
The amount of withholding is influenced by what John Doe puts on his IRS Form W-4 ("Employee's Withholding Allowance Certificate"), which he provides to the employer and on which he indicates how many dependents he has and his marital status, among other things. A copy goes directly to the IRS. Generally, the more allowances the employee claims on a Form W-4, the lower the withholding tax.
Withholding tax applies to income earned through wages, pensions, bonuses, commissions, and gambling winnings. Dividends and capital gains, for example, are not subject to withholding tax. Self-employed people generally don't pay withholding taxes; they typically make quarterly estimated payments instead.
Why It Matters
Withholding tax prevents people from being blindsided by huge tax bills on April 15. By having their employers remit a little out of each paycheck, federal and local governments also ensure steady cash flow throughout the year and reduce the risk that taxpayers will be unable to pay their taxes. A person's tax liability may still be more or less than what he or she pays in withholding taxes in a year. In those cases, the taxpayer may have to pay more money on April 15 or may receive a tax refund. It is important to note that accuracy in payroll is crucial; any mistakes in remitting withholding tax are generally the taxpayer's problem even if they are the employer's fault.
WITHHOLDING TAX Defined for English Language Learners
Definition of withholding tax for English Language Learners
: money that is taken from a person's pay and given directly to the government as income tax
Learn More about withholding tax
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