Film Accounting Glossary
Withholding
What is withholding?
Also called tax withholding, or PAYE.
Withholding is tax an employer or payer deducts from a payment and remits to the authorities on the recipient's behalf, covering federal and state income tax, FICA, and in cross-border cases nonresident withholding.
The obligation sits with the payer, so a production that fails to withhold generally owes the tax itself plus penalties. Loan-out payments are typically made gross precisely because the corporation, not the production, becomes responsible for withholding.
Example
The obligation sits with the payer, not the recipient. A production that fails to withhold on a payment that required it generally owes the tax itself plus penalties, which is why loan-out payments are made gross and the corporation takes on the duty.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Handled by the payroll company for employees, and checked at vendor onboarding for loan-outs and foreign payees.
Common mistake
Assuming the recipient carries the risk. The obligation sits with the payer, so a production that fails to withhold generally owes the tax itself plus penalties.
Related questions
- What does a production withhold from crew pay?
- Federal and state income tax per the employee's W-4, plus the employee share of FICA, remitted by the payroll company as employer of record.
- Why are loan-out payments made gross?
- Because the production is paying a corporation rather than an individual, so the corporation takes on the withholding obligation for its own officer's salary.