Tax Withholding

Tax withholding is the process where your employer deducts a portion of your earnings before you receive your paycheck. This money is sent directly to the government as a pre-payment of your income tax obligations. The goal is to help you meet your annual tax liability gradually, rather than owing a large amount at tax time. Amounts withheld depend on your income level, filing status, and any allowances you claim on your W-4 form. This system helps reduce the chance of underpayment penalties and makes budgeting easier throughout the year.