Withholding


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Withholding

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.

Withholding

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.

withholding

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.

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 ?
For final withholding taxes, the BIR Form 2306 should be given to the payee on or before Jan.
But a single purchase which involves P10,000 or more shall be subjected to withholding tax under these regulations.
To stop backup withholding, the payee must correct any issues that caused it.
The officials cited there was a chance of forensic audit being conducted after filing of annual income return for the tax year 2018 is done by withholding agents.
Of the Rs3.841-trillion annual collection, the withholding taxes, sales tax, customs duty and federal excise duty accounted for Rs3.44 trillion or nearly 90% of the total.
Figure C presents the percentages of U.S.-source income paid to foreign persons and income subject to withholding by income category in 2015.
A foreign seller is entitled to file for a tax refund in cases where a withholding certificate was not issued prior to the date of sale and it is determined that the ultimate tax liability associated with the sale of US real property is less than the FIRPTA tax amount withheld.
Withholding agents must annually file Forms 1042 and 1042-S to report the income paid and the amount of withholding [Treasury Regulations section 1.441-7(a)(1)], Form 1042 is filed solely with the IRS and reports the withholding agent's total amount of withholding and payments made to the IRS.
Comelec also argued that the exemption did not distinguish what kind of tax it is exempted from, and given that the withholding tax is still a tax, it should not be faulted for its failure to withhold such tax.
The association said finality or adjustability of withheld tax cannot be determined by the withholding agents and they should not be burdened with the additional responsibility.
* If you or your client is a trust, check the income distribution deduction on California Form 541, California Fiduciary Income Tax Return, for income that is related to a withholding credit.
If the IRS allows a refund or credit for an amount that a withholding agent has not deposited, it may have difficulty recovering that amount because the taxpayer and sometimes the withholding agent may be outside the United States.