What is withholding?

Withholding (W-4)

Withholding is income tax taken out of each paycheck and sent to the government during the year. The W-4 form, filled out with an employer, sets how much. Too much withheld comes back as a refund at tax time, without interest (definition, opens in a new tab). Too little means a bill when taxes are filed.

Where does this site use it?

• What does cashing out my 401(k) cost?
• What should I do with my tax refund?

Related terms

• Inflation

General education, not financial advice.