What Is Federal Tax Withholding?
You're required to fill out a W-4 form when you are hired by a new employer. The employer will use this information to determine the amount of federal tax to be withheld from each of your paychecks.
Other People Are Reading
-
History
-
The federal withholding tax was instituted in 1943. By 1945, it had helped increase the number of taxpayers in the U.S. to 60 million and the amount of taxes collected to $43 billion.
W-4 Form
-
A W-4 form reports your marital status and the number of dependents you are responsible for financially. You also can claim to be exempt from federal withholding if you did not owe any federal taxes last year and don't expect to owe any in the current year.
-
Employer Responsibility
-
Your employer or the payroll accountant looks up the amount that you earned and the number of dependents you have on the federal withholding chart to determine the amount that should be withheld from each paycheck.
Withholding Tax
-
The employer collects the federal withholding tax amount due and subtracts it from your income on the paycheck stub. The withholding tax monies are set aside and paid to the IRS on a quarterly basis.
Filing Income Tax
-
When you file your annual tax return, you'll subtract the amount you have paid in federal withholding from the amount of tax that you owe.
-
