tax-withholding

Vocabulary Word

Definition

'Tax-withholding' is when a portion of your salary is taken out and set aside before you receive it. This money is used to pay your income taxes to the government so you don't owe a large sum later.

Examples in Different Contexts

In small business tax compliance, 'tax-withholding' from employees' wages is a legal requirement. A business owner might explain, 'We must ensure compliance with tax-withholding regulations to avoid penalties from the IRS.'

Practice Scenarios

Accounting

Scenario:

It's important we review tax rates for the upcoming year. There might be some changes affecting personal income tax.

Response:

I will prepare an updated tax-withholding schedule based on the new tax rates for our review.

Business

Scenario:

Our company is growing, and so will our payroll. We need to ensure compliance with all applicable tax requirements.

Response:

Let's partner with an experienced payroll provider who can handle tax-withholding and other tax compliance needs.