What Is Federal Tax Withholding?

Federal tax withholding is an amount held from a regular employee’s paycheck that goes toward his federal tax obligation. The amount an employer withholds from each paycheck is based on information provided by a worker on a W-4 form, according to the Internal Revenue Service.

When an employee’s situation changes, such as from getting married or having children, he completes a new W-4 form that updates the amount of withholding, according to the IRS. Nonresident alien employees are subject to federal withholding in the same way as a U.S. citizen. Workers in a non-wage job can have extra amounts withheld through an employer or make quarterly estimated tax payments.

If too much tax is withheld over the tax year, the person receives a refund from the Internal Revenue Service when he files his tax return. If not enough was taken out, the tax payer has to pay more money to the IRS when he files. Self-employed individuals do not have tax withheld, but they generally are required to pay an estimated tax on their earnings every quarter.