What is the definition of a withholding tax?

A withholding tax is specifically defined as an amount deducted from worker earnings and sent directly to the government. This system ensures that taxes are collected at the source of income, reducing the burden of a one-time payment at the end of the tax year for employees. Employers are responsible for calculating the appropriate withholding amount based on an employee's earnings and tax classification, which simplifies the process for employees and ensures government revenue is received in a timely manner.

The other options do not accurately represent the nature of a withholding tax. For example, an amount added to the total tax due is more indicative of a tax liability rather than a withholding mechanism. A tax applied only to corporate profits pertains to corporate income tax, which is separate from the concept of withholding. Lastly, a tax on dividends paid to shareholders refers to taxes on investment income instead of income earned through employment. Thus, the correct definition aligns with the practice of withholding taxes from wages to facilitate tax collection.