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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Mnuchin encouraged employers to implement the new income tax withholding tables "expeditiously," doing so no later than Feb.
Generally, a withholding agent must withhold 30% tax on FDAP income unless the agent can reliably associate the payment with documentation that the payment is made to (1) a payee that is a U.S.
For them, the withholding provision will directly impede their cash flow.
The Supreme Court disagreed and held that IRC section 6513(b) required that the withholding and estimated taxes be considered paid on April 15, 1989, which was outside the lookback period.
Instead, payroll tax withholding tables have merely been lowered to remove some of the traditional built-in "padding" which normally results in the large refunds taxpayers have grown accustom to receiving.
24, specifies the following procedure for calculating withholdings. For wages paid after 2005, a new procedure is used to compute Federal income tax withholding on NRA employees' wages.
A new guide prepared by the AICPA employee benefits taxation committee can help practitioners handle tax problems with benefit plans subject to new mandatory 20% income tax withholding provisions (See Tax Briefs, page 34).
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.
Another benefit of using wage withholdings rather than estimated tax payments is that it may enable an individual presently subject to the new rules to begin using the 100% safe harbor again at some point in the future.
It also strengthened earlier wage withholding procedures, mandating that states provide for immediate wage withholding (without determining whether there is an arrearage) unless there is good cause not to require withholding or both parents agree in writing to an alternative arrangement.
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.