Employer Withholding Definition

Withholding is the process of deducting (or withholding) money from an employee’s wages in order to pay taxes (e.g., FICA) to the government.

Employer Withholding Extended Definition
Employers must accurately and promptly submit payroll taxes. Part of that process is collecting the employee portion of the required taxes by withholding specific amounts from each employee’s paycheck.

The money that has been withheld, or kept by the employer, is then paid to the government for taxes such as social security, Medicare, income tax, etc. Employers can use a full-service payroll system to withhold and deposit taxes on their behalf.

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Last Updated By

Rachel Blakely-Gray | Apr 13, 2023