Make Sure to Check Your Withholding, W-4

By Money Girl’s Quick & Dirty Tips for a Richer Life

How Withholding Works

When you take a new job, one of the forms you complete for your employer is the W-4. This form tells your employer how much taxes should be taken out of your pay. The money that comes out of your gross check is called withholding, because it’s withheld from you and goes to the government instead. 

Federal income tax is called a “pay-as-you-go” tax because you must pay up as you earn money during the year. Withholding is a tax collection method that benefits the government because it reduces the chances of tax evasion. It also puts the administrative burden of collection on employers who are required to calculate and submit income taxes on behalf of their employees.  Read More.

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