Withholding Tax
Definition
Tax an employer or payer deducts from a payment and remits to the authorities on the recipient's behalf, so tax is collected as income is earned rather than only at filing.
Related Terms in Payroll
Payroll Register
A detailed record for each pay run listing every employee's gross pay, deductions and net pay. It is the source document for payroll journal entries and for reconciling payroll to the general ledger.
Overtime Pay
Additional pay for hours worked beyond the normal schedule, often at a premium rate set by law or contract. Correctly tracking and rating overtime is a common payroll compliance point.
Wage Garnishment
A legal requirement that an employer withhold part of an employee's pay to satisfy a debt, such as a court order or tax levy, and send it to the relevant party before paying the rest to the employee.
Form 941
The quarterly federal return US employers file to report wages paid and the income tax and FICA (Social Security and Medicare) taxes withheld and owed. It reconciles withholding to deposits made during the quarter.
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