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Withheld Taxes

What are withheld taxes? & What does taxes withheld mean?

Withheld taxes are tax payments withheld from your income and made to the IRS in your name during the tax year by the payer of the income. Depending on the type of income, withholding may be required.

What taxes are withheld and how much?

If you are an employee, your employer will withhold income tax payments from your pay based on the amount your earn and the information you give your employer on Form W-4, Employee's Withholding Allowance Certificate.

Other types of income from which taxes must be or may be withheld include:

  • employment compensation
  • gambling winnings
  • pensions
  • social security benefits
  • interest and dividend payments

The taxes withheld during the year from your income determine whether you owe money or whether you will receive a refund.

How much taxes are withheld?

You are generally required to pay at least 90% of your expected tax liability during the tax year as you receive income. Taxpayers who are employees will generally have taxes withheld from their pay. Taxes may also be withheld from other kinds of income.

Where are taxes withheld reported?

You report the total amount of federal income tax that is withheld and paid for you on line 64 (Federal Income tax withheld from Forms W-2 and 1099) in the Payments section of Form 1040 and include it in the total payment entered on line 72 (Your total payment).

Types of tax withholding?

Withholding of taxes from some types of income is mandatory (required). You also choose to have taxes withheld from other types of income such as unemployment compensation. This is called Voluntary withholding. Each type of income and the taxes withheld are reported to you and to the IRS on a different type of form.


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