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Questions about Withholding Income Tax

What is withholding income tax?

Withholding tax or retention tax is a type of government requirement for an employer to withhold tax from an employee’s pay and send the tax that they withheld to the government. In certain jurisdictions, there are laws that require for withholding tax to be applied to interest or dividends. In most cases the withheld taxes are applied to what a person owes in taxes and a part or all of the withheld taxes may be refunded to them once they file their income tax return. In most cases there is a fixed percentage that is applied to the withholding tax. Read below where Experts have answered many questions about withholding income tax.

If an employee fills out a W4 form and does not claim exempt as well as instructs the employer to not withhold anything besides FICA and SDI, what are the legal implications if the lawyer follows the request of the employee?

If the employer has a letter from the employee that says that they do now want the employer to withhold any taxes besides the stated taxes, then the employer would attach that letter to the employee’s W4. In most cases it would be easier for the employee to just claim exempt, but if they have the letter then the employer should not have any issues. Another way that may help the employer and the employee is to have the employee fill the W4 out and claim the max amount of 15 dependents if the person is single and this will make it to where no federal taxes are taken out. Regardless of how the employer chooses to do the withholdings, as long as it is all in writing then the employer would be covered.

Is an employer suppose to withhold taxes out of a Canadian citizen’s pay if they have an Individual Taxpayer Identification Number (ITIN)?

In most cases, when a Canadian resident has an ITIN number, then they are subject to withholding of taxes. An ITIN generally does not give the person any special advantages and can file a tax return and have any money that is due to the person refunded to them as long as they use the ITIN number on the tax return.

What would a person do to withhold income tax?

The person would want to use the W4 form formulas. The person would have to consider the factors such as; the expected Adjusted Gross Income, filing status, how many jobs the person has, and any expected deductions.

Can the state of California legally withhold a person’s income tax return until the state is in a better financial position?

In most cases if the state is strapped for cash are withholding people’s tax returns because they are not able to pay the funds to the recipients. There are several groups like the Civil Liberties Union who have tried to file law suits against this type of action, but no cases have been heard as of yet so until there is a decision through the courts, then the state of California and many other states are withholding taxes because they do not have the funds to pay them.

When a person is dealing with tax returns or withholding of taxes from their paychecks, then they may run into questions regarding what the laws are and what is allowed in regards to withholding taxes. When these concerns arise, then the person would want to gain answers from an Expert.
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