What is Withholding Tax?
Effective, January 1, 1972, the Ohio Revised Code requires withholding by employers. The Ohio withholding procedures have been patterned after federal procedures. All compensation paid in Ohio to employees is subject to withholding of Ohio income tax. Compliance with withholding procedures is mandatory. For purpose of assessment and collection, amounts required to be withheld and paid to the Ohio Department of Taxation are considered to be a tax on the employee. Each withholding agent is liable for the tax which he is requested to withhold.
Withholding tax is the money an employer takes out of an individual’s paycheck and sends to the Tax Commission as a pre-payment toward that individual’s income tax liability. Because withholding tax is a trust fund tax, an employer must keep the withheld money safe until it is sent to the Tax Commission.
A withholding tax is an amount of money deducted straight from money you’d normally be paid, most often by employers, but occasionally by financial institutions, or if you’re lucky enough, from a large jackpot in a lottery. For the basic paycheck, the employer uses the withholding tax to pay taxes to a government. In the US, this can mean employers withhold taxes to pay the Internal Revenue Service, and in states where there is a tax on income, employers may also use a withholding tax to pay state taxes. Money is additionally withheld to make contributions to Social Security. In the US, both federal and state withholding tax tends to be determined by two factors: the amount of income you make and the number of exemptions you take. If people don’t feel their year’s salary is going to require them to pay much in tax, particularly if their income falls below the poverty level, they may claim the maximum number of exemptions in order to reduce amounts taken from their paycheck. This way th
Withholding tax is a tax deducted from the gross amount of interest paid to you. This automatic deduction occurs when a valid Tax File Number (TFN) has not been provided. When you open a RaboPlus account online, you will be asked to provide your Tax File Number (TFN) or TFN exemption. In the case of joint accounts, both account holders are required to supply a valid TFN.
