![]() How tax withholding worksīased on the information you provide to your employer, your employer withholds a portion of your paycheck each period to pay your taxes on your behalf. Withholding allows the payer to manage their tax bill gradually, rather than owe one large bill come tax season.Įmployers withhold several different taxes, including state and federal income taxes, Social Security taxes and Medicare taxes. Tax withholding refers to the income tax an employer removes from an employee’s paycheck and sends to the Internal Revenue Service (IRS) on the employee's behalf. Read on to learn more about how tax withholding works so that you can determine the best withholding rate for your situation - and how to update your withholding when your situation changes. But as a taxpayer, deciding how to fill out the form can be tough, especially if you anticipate a life event, such as getting married or becoming a parent, over the next year. While not required, updating your withholding at the start of each tax year often makes sense. The answers you provide on that form will determine how much money your employer "holds back" from your paycheck to pay taxes on your behalf. Withholding allows you to manage your tax bill gradually, rather than owe one large bill during tax season.Īmong the many forms you complete when starting a new job, Form W-4, which determines your tax withholding, can be the most confusing.Your employer decides how much money to withhold from your paycheck based on the information you share on tax forms. ![]() Tax withholding is when your employer keeps some of your salary out of your paycheck and pays your taxes on your behalf.
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