Withholding

Money your employer takes from each paycheck and sends to the IRS on your behalf. It's a pre-payment of your taxes.

Full explanation

Federal income tax withholding is money your employer deducts from your wages and sends to the IRS throughout the year. The amount is based on your W-4 selections, filing status, and pay frequency. At tax time, you compare total withholding (Box 2 of your W-2) against your actual tax liability. Withheld more than you owe = refund. Withheld less = you owe the difference. Social Security and Medicare taxes (FICA) are also withheld but are separate from income tax withholding.

Source: IRS Publication 505

Ask the AI about this

“How does withholdingaffect my taxes?”

Tax education only. Source: IRS Publication 505.