Withholding Tax

AAA

DEFINITION of '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.

INVESTOPEDIA EXPLAINS 'Withholding Tax'

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.

VIDEO

Loading the player...
RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Withholding Allowance

    An allowance an individual claims on a W-4 Form. A withholding ...
  3. Pay As You Earn - PAYE

    A system of income tax withholding that requires employers to ...
  4. IRS Publication 550

    A document published by the Internal Revenue Service (IRS) that ...
  5. W-4 Form

    A form completed by an employee to indicate his or her tax situation ...
  6. Withholding

    The portion of an employee's wages that is not included in his ...
RELATED FAQS
  1. How do you calculate beta in Excel?

    Many investors use the risk measurement beta, or ?, when evaluating a given equity. Beta looks at the historical performance ... Read Full Answer >>
  2. When can you withdraw your savings from a Registered Retirement Savings Plan (RRSP)?

    The standard age for withdrawing savings from a Registered Retirement Savings Plan (RRSP) is 71. Once you have reached this ... Read Full Answer >>
  3. How is a Registered Retirement Income Fund (RRIF) taxed?

    Tax deferral is the primary benefit of a Registered Retirement Income Fund. The Government of Canada allows citizens to register ... Read Full Answer >>
  4. I will be receiving monies from a QDRO executed pursuant to my divorce. I would like ...

    There are several issues to consider: The early distribution penalty - Assets distributed from a qualified plan in accordance ... Read Full Answer >>
  5. If an employee is paid by commission, who is responsible for withholding taxes?

    It depends. An individual who receives commissions can be treated in the same manner as an individual who receives straight ... Read Full Answer >>
  6. What is the difference between a write-off and a writedown?

    In terms of accounting, a write-down is performed to reduce the value of an asset to offset a loss or expense. A write-down ... Read Full Answer >>
Related Articles
  1. Taxes

    What is Withholding Tax?

    Withholding tax is the income tax federal and state governments require employers to withhold from employee paychecks.
  2. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  3. Taxes

    Next Season, File Taxes On Your Own

    Master these fundamentals and you'll be doing your own taxes with minimal stress.
  4. Taxes

    When You Should Change Your Withholding Tax

    When there are major changes in your life, you should adjust your withholding to ensure you aren't paying too much in taxes.
  5. Taxes

    The Impact Of U.S. Corporate Taxation On Investment Decisions And CFC Transfer Pricing

    To avoid taxation, businesses do careful tax planning, taking into consideration more than one country's taxation system.
  6. Options & Futures

    How To Owe Nothing On Your Federal Tax Return

    You have the control to determine whether you owe in April. Learn more here.
  7. Taxes

    Tax Withholding: Good For Government, Bad For Taxpayers

    It's important to understand where that money coming out of your paycheck goes and why - after all, you earned it.
  8. Taxes

    3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  9. Options & Futures

    Employee Stock Options (ESO)

    Employee stock options are a form of equity compensation granted by companies to their employees and executives.
  10. Taxes

    6 Reasons to Use a Household Help Agency

    It's not just because they find you well-qualified workers. Agencies spare you the paperwork and taxes required when you hire on your own.

You May Also Like

Hot Definitions
  1. Radner Equilibrium

    A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then ...
  2. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  3. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  4. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  5. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  6. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!