What does Withholding mean?

Withholding refers to the payroll taxes, pre-tax deductions and after-tax deductions dollar amounts subtracted from the employee’s gross pay. The employer collects these withholdings, along with appropriate contributions from the employer, which are then forward to the IRS, state tax jurisdictions, local tax jurisdictions, child support disbursement units and all other respective payroll agencies. To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee.

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