Withholding Tax (redirected from Withholding taxes)

Withholding Tax

1. Income tax withheld from employees' wages and paid directly to the government by the employer.

2. A tax levied on income (interest and dividends) from securities owned by a non-resident.

Notes:

1. The amount withheld is a credit against the income taxes the employee must pay during the year.

2. Tax is deducted not only from dividends, but from other income paid to non-residents of a country.

See also: Dividend, Income Tax, Internal Revenue Service - IRS, W-2 Form, W-4 Form, Withholding, Withholding Allowance

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Withholding tax

A tax levied by a country of source on income paid, usually on dividends remitted to the home country of the firm operating in a foreign country.