Employer Withholding Definition

Term Definition
Employers are required by law to deduct (or withhold) money from an employee’s wages in order to pay taxes to the government (e.g., FICA).

Extended Definition
It is crucial that employers 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 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.

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