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InvestHub.com's
Finance Dictionary and Glossary of Investment Terms

withholding tax  

Definition 1.

An amount of an employee's income that an employer sends directly to the federal, state, or local tax authority as partial payment of that individual's tax liability for the year. When a person starts a new job, he/she is required to fill out a W-4 form on which he/she can indicate his/her filing status and the number of allowances he/she is claiming. also called withholding.
 

Definition 2.

A tax levied by a country of source on income paid, usually on dividends remitted to the home country of the firm operating in a foreign country.
 

Definition 3.

The amount of income tax an employer is required to withhold from an employee's salary.
 
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