Tax Withholding
Money your employer sends to the tax authority from each paycheck toward your tax bill.
Tax withholding is the portion of your pay that an employer deducts and forwards to the government as an advance on your income tax. Setting it accurately avoids a large bill or an oversized refund, which is effectively an interest-free loan to the government.
Examples
- Adjusting your withholding can prevent a surprise tax bill at year end.