withholding

n.
A portion of an employee's wages or salary withheld by the employer as partial payment of the employee's income tax. Also called withholding tax.

Any tax that is taken directly out of an individual's wages or other income before he or she receives the funds.

Investopedia Says:
In other words, these funds are "withheld" from your wages.

Related Links:
We clarify some rules that often puzzle taxpayers. Common Tax Questions Answered
Getting organized well before the deadline will curb your frustration and your tax liability. Money Saving Year-End Tax Tips

Securities: violation of the Rules of Fair Practice of the National Association of Securities Dealers whereby a participant in a Public Offering fails to make a bona fide public offering at the Public Offering Price-for example, by withholding shares for his or her own account or selling shares to a family member, an employee of the dealer firm, or another broker-dealer-in order to profit from the higher market price of a Hot Issue. See also Immediate Family; Investment History.

Taxes:

1. Deduction from salary payments and other compensation to provide for an individual's tax liability. Federal income taxes and Social Security contributions are withheld from paychecks and are deposited in a Treasury Tax and Loan Account with a bank. The yearly amount of withholding is reported on an income statement (form W-2), which must be submitted with the federal, state, and local tax returns. Liability not provided for by withholding must be paid in four Estimated Tax payments.

2. Withholding by corporations and financial institutions of a flat 10% of interest and dividend payments due securities holders, as required under the Tax Equity and Fiscal Responsibility Act of 1982. The purpose was to levy a tax on people whose earnings escaped tracking by the Internal Revenue Service. The 10% withholding requirement was repealed in 1983. As a compromise, "backup withholding" was instituted, whereby, using Social Security numbers, payments can be reported to the IRS and matched against the actual income reported.

3. Withholdings from pension and annuity distributions, sick pay, tips, and sizeable gambling winnings, as stipulated by law.

4. 30% withholding requirement on income from U.S. Securities owned by foreigners-repealed by the Tax Reform Act of 1984.

That portion of wages earned that an employer deducts, usually for income tax purposes, from each salary payment made to an employee. The amount so deducted is then forwarded to the government to be credited against the total tax owed by the employee at the end of the taxable year. See tax [withholding tax].

IN BRIEF: n. - The act of deducting from an employee's salary; The act of keeping in your possession or control; Income tax taken out of employees' wages and paid directly to the government by the employer.

Something we were withholding made us weak Until we found that it was ourselves. — Robert Frost.

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)