The federal government has been imposing taxes with a sheer pace for a while. Either it is about imposing taxes on cellphones, vehicles, electronic equipment or any other tangible or intangible stuff. The government is not coming slow. They have started to levied tax on every deal. With the booming industry in every domain, taxes are now becoming more and more part of an agenda. Under the federal income tax withholding, law which of the following is not defined as an employee will be discussed in this article.
What actually a Withholding Tax is?
A withholding tax, or a retention tax, is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient. In most jurisdictions, the withholding tax applies to employment income.
History Behind Withholding Taxes
The history of the withholding taxes draws our attention towards how the government used to manipulate people with uninformed things. In the time of WWII, Congress passed a bill of payroll withholding tax payment using the Current Tax Payment Act of 1943.
In the United States Tax System, Withholding Tax is defined as:
This greatly eased the collection of the tax for both the taxpayer and the Bureau of Internal Revenue. However, it also greatly reduced the taxpayer’s awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future. (WIKIPEDIA)
Withholding Tax In the United States
Three key types of withholding tax are imposed at various levels in the United States:
- Wage withholding taxes.
- Withholding tax on payments to foreign persons.
- Backup withholding on dividends and interest.
Under the federal income tax withholding law which of the following is not defined as an employee
So under the federal income tax withholding law which of the following is not defined as an employee and making no federal income tax is a requirement to be withheld in one condition. It will happen if a partner of the company does this during the partnership agreement.
In the end, the only thing that makes importance here is the employee. But unfortunately, the employees do not get the piece of pie instead, they pay a hefty amount of taxes on behalf of the employer and employer’s partner.