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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 ?
1.1445-2(d)(3) (ii) and (iii) to withhold the alternative amount or application for and receipt of a withholding certificate, the transferee must withhold 10% of the amount realized from the transaction pursuant to Sec.
[section] 54A:7-1(a) (employers maintaining an office or transacting business in the state and making a wage payment subject to New Jersey personal income tax to a resident or nonresident individual must withhold taxes).
The payor or broker backup withholds after the certification of exempt stares or a taxpayer identification number is provided, but before the payor or broker is required to treat them as received under Regs.
1.83-6(a)(2) provides a special rule; a deduction is allowed only if the service recipient (i.e., the employer) deducts and withholds income tax in accordance with Sec.
The Service could then notify the employer to withhold, using a maximum number of exemptions for an employee.