|Updated: 3/02/2007 5:06 pm
||Published: 3/02/2007 5:06 pm
Tax withholding is the amount of income your employer withholds from your earnings to pay income tax. Certain other income, including pensions, bonuses, commissions, and gambling winnings may also be subject to tax withholding. In each case, the amount withheld is paid to the Internal Revenue Service. Two factors determine the amount of income tax your employer withholds from your regular pay-the amount you earn, and the information you give your employer on your W4 (W-4) Form. Your employer will figure your withholding based on whether you want to withhold at the single rate, or at the lower married rate; how many withholding allowances you claim-since each allowance reduces the amount withheld; and whether you want any additional amount withheld. The IRS (I-R-S) may charge you a penalty for not paying enough tax through withholding, or through estimated tax payments. After you complete your W4 Form, you and your employer can check to see whether the amount of tax withheld from your pay is too much, or too little. If too much or too little tax is being withheld, you should give your employer a new W4 Form to change your withholding status. These tips are provided to give you general information about your taxes. If you have specific questions, please consult a tax advisor or call the toll-free number for Federal Tax Information and Assistance at 1-800-829-1040.