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Meaning of Withholding TaxFirst DefinitionAn 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 anyone starts a new profession, he/she is required to fill up a W-4 form on which he/she can specify his/her filing position and the number of allowances he/she is claiming. Also called withholding.Second DefinitionEmployee income taxes (such as PAYE) and supplementary government imposed deductions from dividends, salaries, earnings, and other incomes. Withholding taxes are levied at the spot of expense of incomes, and are passed on to the government by the entities collecting them.The government changed this amount in the stimulus package put together by President Obama. The amount will allow between $45.00-$65.00 additional each month in take home pay. This could give you back almost $600.00 a year.You will be taxed at the previous higher rates if your income level is upper than $95,000.00. This amount is doubled if you filed married filing jointly.Try using the Free Tax Calculator to see if you are withholding enough tax from your paycheck. How ...more
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