Withholding Tax Definition
Define Withholding Tax In Simple Terms
The Purpose of Withholding Tax In Finance
The purpose of a withholding tax is to allow the US government to tax residents at the source, i.e. their employer, rather than trying to collect taxes after they have been earned.
The primary type of withholding tax is US resident withholding tax, which is collected from every employer in the United States.
The only income exempt from withholding tax is income earned by independent contractors and investors, although those groups are not exempt from income tax.