<Li> Wage withholding taxes, </Li> <Li> Withholding tax on payments to foreign persons, and </Li> <Li> Backup withholding on dividends and interest . </Li> <P> The amount of tax withheld is based on the amount of payment subject to tax . Withholding of tax on wages includes income tax, social security and medicare, and a few taxes in some states . Certain minimum amounts of wage income are not subject to income tax withholding . Wage withholding is based on wages actually paid and employee declarations on Federal and state Forms W - 4 . Social Security tax withholding terminates when payments from one employer exceed the maximum wage base during the year . </P>

When did automatic withholding of federal income tax begin