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Definition - What does Withholding mean?

Withholding is a term which means the portion of a person's wages which are not given to them but are instead sent to the government in order to comply with tax implication and legal withholding requirements. The amount of withholding is based on a percent of the total earned. The percent is different from state to state. Larger income earners pay more withholding than small income earners. It is a legal requirement for employers to withhold a portion of each employees wages in this way.

Justipedia explains Withholding

At the end of the business year, employees are able to file tax returns to claim back a portion of the amount withheld through withholding over the calendar year. The amount returned to a person is different and varies based on how many dependents a person has and the amount earned in the first instance.

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