withholding tax
with·hold·ing tax
W0193300 (wĭth-hōl′dĭng, wĭth-)withholding tax
withhold′ing tax`
n.
Noun | 1. | withholding tax - income tax withheld from employees' wages and paid directly to the government by the employer |
单词 | withholding tax | |||
释义 | withholding taxwith·hold·ing taxW0193300 (wĭth-hōl′dĭng, wĭth-)withholding taxwithhold′ing tax`n.
Withholding TaxWithholding TaxThe amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. The federal Income Tax system is a "pay-asyou-go" system that requires wage earners to pay federal tax as they earn income. The federal government enforces this system through a withholding tax on wages and salary income. A taxpayer who does not have enough tax withheld may be subject to penalties for underpayment. In 1942 the federal government instituted a one-time withholding tax as a revenue-raising device during World War II. Withholding taxes are now a permanent method of collecting income taxes at the state and federal levels. Each pay period an employer is required to withhold tax from each employee's gross salary and send it to the Internal Revenue Service (IRS) and to the state revenue collection agency, if the state has an income tax. When a person is hired for a salaried job, the new employee must complete a federal W-4 form, which authorizes the employer to retain a certain amount of the employee's earnings to be forwarded to the government to satisfy the employee's federal income tax liability. The W-4 consists of a certificate showing the withholding allowances claimed by the employee and a worksheet in the form of an abbreviated tax return. The employee estimates her income, deductions, credits, and exemptions to determine how many withholding allowances to claim. The more allowances claimed, the less tax is taken out each pay period. The goal is to have the withheld taxes equal the yearly tax liability. Taxpayers who underestimate the withholding tax needed to satisfy their tax liability may have to pay a penalty for underpayment. The IRS encourages taxpayers to review their financial situation periodically and file amended W-4 forms. Backup withholding is a way of assuring that tax is paid on dividend and interest income. If a taxpayer does not provide his Social Security number to the payer of dividend or interest income, such as a bank, the institution must withhold a "backup" of 31 percent of each payment until the taxpayer provides the number. withholding taxWithholding taxPayroll Taxwithholding taxTAX deducted at source from INTEREST or DIVIDEND payments. Withholding taxes are often levied by a country upon interest and dividends paid by a domestic company to non-residents. It is a means of taxing cash flows from the company before such monies move out of their jurisdiction. Such taxes are levied in order to encourage investment at home and raise money for the government. Looked at more broadly from an international community perspective witholding taxes are harmful because they reduce the free flow of international investment and distort the geographical location of such investment. See DOUBLE TAXATION.withholding taxa TAX levied by a government on the income (profits, interest, etc.) earned on a foreign portfolio or direct investment by its citizens and companies. Such a tax is levied in order to encourage investment at home and to raise money for the government. Looked at more broadly from an international community perspective, a withholding tax is harmful because it reduces the free flow of international investment and distorts the geographical location of such investment. The EUROPEAN UNION is currently considering introducing a withholding tax, which the UK, as an important centre for the EUROBOND market and a substantial recipient of FOREIGN INVESTMENT, is opposing because of the adverse effect this will have on capital inflows.See WT withholding tax
Synonyms for withholding tax
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