Legal Definitions - withholding

Definition: Withholding in a legal context means taking out a certain amount or percentage of money from a person's income, like from their paycheck or investment earnings. This money is usually paid to the government by the person or organization that withholds it (like an employer).

Example: Let's say you work at a company and earn $1,000 per paycheck. Your employer is required by law to withhold a certain amount of money from your paycheck for taxes. This means that you might only receive $800 in your paycheck, with $200 being withheld and sent to the government.

Another example is if you receive dividends from stocks you own. The company that pays the dividends might withhold a certain percentage of the earnings and send it to the government on your behalf.

These examples show how withholding works in practice - a portion of your income is taken out and sent to the government to cover taxes or other obligations.