Withholding Tax

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What is 'Withholding Tax'

Withholding tax is 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.

BREAKING DOWN '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.

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RELATED FAQS
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    Find out how the withholding tax differs for married and single individuals, including examples of how the income tax rate ... Read Answer >>
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    Read about withholding taxes, how they work, and why there are both federal and state withholding lines on the typical American's ... Read Answer >>
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  4. How can I lower my effective tax rate without lowering my income?

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