Withholding

Definition:

Withholding is the act of deducting amounts from an employee's salary to fulfill government requirements or for causes approved by the employee. Some types of withholding are:

• Required Federal income tax withholding, based on the W-4 Form filled out by the employee
  
• Required state income tax withholding, based on state W-4 form filled out by the employee (for states which have state income tax)
  
• Required FICA tax deductions for social security and Medicare, based on specified percentage of employee's gross pay (automatic deduction; no employee permission required)

Other deductions may be withheld from employee pay, for charities, for retirement plan contributions, or other purposes. All of these withholding deductions must be approved by the employee and a signed approval must be in the employee's payroll file.