Final answer:
An employer-employee relationship is required for withholding federal income taxes, as employers must deduct taxes directly from an employee's wages and remit them to the IRS. The withholding system facilitates the efficient collection of taxes and contributions to insurance programs.
Step-by-step explanation:
An employer-employee relationship is indeed a prerequisite for withholding federal income taxes. The withholding tax system is designed to collect income taxes from employees as they earn their wages. This means that an employer must have an existing employer-employee relationship to withhold taxes. Employers are responsible for deducting and remitting these taxes to the Internal Revenue Service (IRS) on behalf of their employees.
The system is designed to be efficient, as taxes are deducted directly from the employee's paycheck and eliminates the need for the employee to make lump-sum payments at the end of the year. Employers also contribute to taxes based on employee wages, which fund various insurance programs, including social security. Without an employer-employee relationship, there would be no wage from which to withhold taxes, and the employer would not be subject to these taxing responsibilities.
Before any federal income taxes may be withheld, there must be, or must have been, an employer-employee relationship. This means that an individual must be working for an employer in order for federal income taxes to be withheld from their wages. The employer is responsible for withholding the taxes from the employee's paycheck and remitting them to the appropriate tax authorities.
For example, if someone is self-employed, they are responsible for calculating and remitting their own federal income taxes, as there is no employer-employee relationship. Similarly, if someone is working as an independent contractor, they are also responsible for calculating and remitting their own federal income taxes.