Tax Withholding

For employees, withholding is the amount of federal income tax withheld from your paycheck. The amount of income tax that is withheld from your pay depends on two key factors. The amount of money you earn and the information you provide your employer when completing Form W-4.

The vast majority of people who are employed in the United States are subject to tax withholding. The amount withheld is a credit against the income taxes the employee must pay during the year. Nonresident aliens are also subject to withholding taxes on earned income as well as on other income such as interest and dividends from the securities of U.S. companies that they own.

If too much money is withheld, an employee receives a tax refund. If enough is not withheld throughout the year, you may have to pay the IRS back. 

To prevent from owing money back, I encourage my clients not to claim exemption throughout the year, or at least no more than 4 months.  

If you have a second job, are self-employed or have income from the Gig Economy, you may need to pay estimated taxes. Check your withholdings now to avoid a surprise tax bill from the #IRS.