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Related to withholdings: Federal Income Tax Withheld


Used in the context of securities, the illegal practice of a public offering participant keeping some shares in a private account or with a family member, employee, or dealer to profit from the higher market price of a hot issue.
Used in the context of taxes, the withholding by an employer of a certain amount of an employee's income in order to cover the employee's tax liability. Also used to refer to the withholding by corporations and financial institutions of a flat 10% of interest and dividend payments due to security holders.


The act or practice of not giving a certain percentage of money that otherwise belongs to a person. Withholding must occur in accordance with appropriate laws and may not be arbitrary. Withholding is most common in taxes, in which an employer retains a certain percentage of an employee's wages or salary and gives it to the IRS instead of the employee. Likewise, a manual rollover to an IRA is subject to a 20% withholding. Courts may order withholding for reasons such as child support or alimony. See also: Overwithholding.


1. The holding back of a portion of wages, dividends, interest, pension payments, or various other sources of income for payment of taxes to the U.S. Treasury. See also backup withholding.
2. The illegal holding back of a portion of securities allocated as part of a new issue to a member of an underwriting syndicate. The underwriter may wish to keep the securities or resell them to a designated party so as to profit from an expected price rise soon after the issue has been offered to the public.


Withholding is the amount that employers subtract from their employees' gross pay for a variety of taxes and benefits, including Social Security and Medicare taxes, federal and state income taxes, health insurance premiums, retirement savings, education savings, or flexible spending plan contributions, union dues, or prepaid transportation.

Contributions to tax-deferred savings plans are withheld from your pretax income, as are amounts you put into tax-free flexible spending and prepaid transportation accounts. Those amounts reduce the taxable salary that your employer reports to the IRS.

References in periodicals archive ?
payers of FDAP income need to understand the reporting and withholding requirements related to FDAP income to minimize their audit risk and their personal tax liability for missed withholdings.
For them, the withholding provision will directly impede their cash flow.
The Unemployment Compensation Amendments Act of 1992 requires 20% withholding for most qualified plan distribution.
One predominating factor has justified the release of modified tax withholding tables: under the old withholding system, millions of Americans were overwithheld and ended up giving the government, in effect, an interest free loan annually.
24, specifies the following procedure for calculating withholdings.
All states, as well as the District of Columbia and the territories of Guam, Puerto Rico and the Virgin Islands, now have their own formulabased child support guidelines to determine child support awards and wage withholding and to modify previous awards.
On the other hand, if the S corporation does not pay premiums for its employees generally or for a class of employees, the cost of the premium payments for a 2% shareholder is subject to income, Social Security and Medicare tax withholdings.
The Social Security Domestic Employment Reform Act of 1994 (the Act) attempts to simplify the rules relating to employment taxes and income tax withholding for household employees.