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Simple English definitions for legal terms
withholding
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A quick definition of withholding:
Term: Withholding
Definition: Withholding is when a certain amount of money is taken out of a person's income, like their paycheck or money they make from investments. This money is usually taken out to pay for things like taxes. The person or company who takes out the money then gives it to the government. For example, if you work at a job, your employer might take out some money from your paycheck to pay for taxes and then give that money to the government.
A more thorough explanation:
Definition: Withholding in a legal context means taking out a certain amount or percentage of money from a person's income, like from their paycheck or investment earnings. This money is usually paid to the government by the person or organization that withholds it (like an employer).
Example: Let's say you work at a company and earn $1,000 per paycheck. Your employer is required by law to withhold a certain amount of money from your paycheck for taxes. This means that you might only receive $800 in your paycheck, with $200 being withheld and sent to the government.
Another example is if you receive dividends from stocks you own. The company that pays the dividends might withhold a certain percentage of the earnings and send it to the government on your behalf.
These examples show how withholding works in practice - a portion of your income is taken out and sent to the government to cover taxes or other obligations.