Withholding of Tax
Persons paying wages or making certain payments to foreign persons are required to withhold income tax from such payments. The Social Security tax is one type of withholding tax. Withholding of income tax is also required. Income tax withholding on wages is based on declarations by employees and tables provided by the IRS. Persons paying interest, dividends, royalties, and certain other amounts to foreign persons must also withhold income tax at a flat rate of 30%. This rate may be reduced by a tax treaty. Additional backup withholding provisions apply to some payments of interest or dividends to U.S. persons. The amount of income tax withheld is treated as a payment of tax by the person receiving the payment on which tax was withheld.
Read more about this topic: Income Tax In The United States
Famous quotes containing the words withholding and/or tax:
“When it comes to finances, remember that there are no withholding taxes on the wages of sin.”
—Mae West (1892–1980)
“As a Tax-Paying Citizen of the United States I am entitled to a voice in Governmental affairs.... Having paid this unlawful Tax under written Protest for forty years, I am entitled to receive from the Treasury of “Uncle Sam” the full amount of both Principal and Interest.”
—Susan Pecker Fowler (1823–1911)