The tax law on payroll withholding has been in existence for decades, allowing the IRS and state tax agencies to obtain potential tax revenue as soon as possible. Written into both federal and state laws, withholding requirements are placed on all employers to make sure a specific portion of workers' earnings is captured from payroll as soon as a paycheck is created. In some cases withholding is also applied in non-payroll situations where a contractor has not provided sufficient tax information to an employer.
Withholding in and of itself is not a tax, even though it may seem like one to a paycheck recipient. Depending how much is earned, a paycheck recipient will realize the effect of withholding for federal tax, state tax, Medicare, and social security. In some regions withholding may also occur for local taxes as well. The funds are redirected to the respective tax agency and paid in the name of the person who earned the money. At the end of the tax year the workers receives an IRS W-2 form spelling out how much was earned at the given job and how much was withheld.
This information is then submitted with a tax return to the IRS and state tax agencies. If the worker paid too much, then the funds come back as a tax refund. If he did not have enough withheld, the amount already paid is deducted from taxes owed and the remainder is due when the income tax return is filed.
In the view of many critics tax withholding is essentially providing the government an interest-free loan. Workers don't get the see the funds until an income tax return, and for most workers earning less than $50,000 most of the funds come back. As a result, the government is financing itself for free on thousands of workers. However, federal law was written to make sure the IRS was able to catch the taxable money as quickly as possible for the government's use and the requirement hasn't changed. Most state laws mirror the same requirements.
In the case of contractors withholding of up to 28 percent can be required on an employer if the contractor doesn't provide tax identification information to the employer. This is an additional method by which the IRS can make sure it either tracks the contractor or gets the contractor's taxable funds if the business has no immediate information provided.
The income tax is what is paid by "withholding of tax" from someones payment/pay. Other taxes or charges, like insurance, worker comp, etc may be [apd by withholding the amount from payment/payroll. There is really no such thing as a tax on withholding.
Classic Withholding Tax applies to the practice in some countries for people paying invoices to hold back a certain portion of their payment for withholding tax purposes. The United Kingdom is one of the countries the utilizes the Classic Withholding tax method.
yes
It is called tax withholding. Many people simply call it withholding.
When paying withholding tax the double accounting method would be to first post the amount as an Accounts Receivable, under Withholding Tax. The next step would be to post the amount to Accounts Payable under Withholding Tax.
What your asking for doesn't exactly exist...there are several different ways to calculate withholding. Explained: http://www.irs.gov/pub/irs-pdf/p15a.pdf
Withholding tax is not required in SAP but this functionality available for the countries where it is required. There are two kinds of Withholding tax, Classic and Extended.
The income tax is what is paid by "withholding of tax" from someones payment/pay. Other taxes or charges, like insurance, worker comp, etc may be [apd by withholding the amount from payment/payroll. There is really no such thing as a tax on withholding.
Classic Withholding Tax applies to the practice in some countries for people paying invoices to hold back a certain portion of their payment for withholding tax purposes. The United Kingdom is one of the countries the utilizes the Classic Withholding tax method.
yes
16. The Thurstons' total federal income tax withholding is $
withholding tax
No. Its an excise tax
It is called tax withholding. Many people simply call it withholding.
Yes, retirement pensions are typically subject to Federal Income tax withholding unless they are from non-taxable sources such as Roth IRAs. The amount of tax withheld depends on the individual's withholding elections and tax bracket.
social security tax
Ross McGill has written: 'Investment withholding tax' -- subject(s): Taxation, Portfolio management, Withholding tax, Investments 'Technology Management in Financial Services (Finance and Capital Markets)' 'International Withholding Tax'