Save 75% on Vendor Payment Costs – Join our webinar and get 1 month free trial!
W-2 Filing Available for All Businesses and Individuals
We are pleased to announce that all businesses and individuals can now file W-2 forms with Zenwork. If you previously received a letter from the Social Security Administration (SSA) regarding electronic wage report submissions, please note that the issue has been fully resolved. Our systems are fully operational, and we are processing W-2 and W-2C filings without any disruptions.
Thank you for your continued trust!
1099 Forms
Payroll Forms
STOCK OPTIONS
WAGE TAX FORMS
FORM 592-B
ACA FORMS
1098 FORMS
480 FORMS
Extension Forms
Form 8027
Form 8955-SSA
1042 FORMS
5498 Forms
STATE FILINGS
STATE Payroll Forms
STATE ONLY FILING
WEST
MIDWEST
SOUTH
NORTHEAST
File multiple returns through bulk upload and import data directly via QuickBooks, Xero, etc.
Manage multiple clients with a single sign-on and reduce operation workload with Tax1099.
Create, validate, schedule, and deliver forms effortlessly from a single platform.
Manage W-9, 1099-NEC, and other IRS forms for gig workers with our intuitive platform.
Verify Payees/Merchants with real-time TIN Matching and efile in bulk with our API.
Import and organize your trading data with our real-time data management.
TAX FORM FILING
Data Import & Management
USER & WORKFLOW MANAGEMENT
Validation & Checks
PRINT & DELIVERY
COMPLIANCE & security
ADDITIONAL FEATURES
Integrations
Acquire the help required from our support.
Visual guides to help you work with Tax1099
Stay up to date about latest IRS updates.
Read the real-life success stories of our users.
Explore industry insights & latest updates
The A-Z list for tax-related terms & definitions.
Listen to thought-provoking insights and discussions with experts.
Tools
Δ
Home » Withholding Tax
Withholding tax refers to the portion of federal income tax that an employer deducts from an employee’s paycheck before wages are paid. This amount is sent directly to the Internal Revenue Service (IRS) and credited toward the employee’s annual income tax liability. The system ensures taxes are collected as income is earned, aligning with the U.S. tax framework’s pay-as-you-go approach. For most employees, withholding tax is a standard part of each payday, visible on pay stubs and summarized annually on the Form W-2, Wage and Tax Statement, provided by employers at year-end.
Withholding tax is not limited to regular paychecks. It may also apply to income sources like pensions, bonuses, or gambling winnings, though rules can vary (e.g., Form W-4P is used for pensions). Across these sources, withholding helps maintain consistent tax payments throughout the year.
Withholding tax acts as a bridge between earnings and tax liability, affecting take-home pay and tax return outcomes. Its importance stems from several key points:
For employees, the goal is to strike a balance: withholding enough to meet tax responsibilities without overpaying or underpaying. Resources are available to assist in achieving this balance.
The IRS provides employers with calculation methods detailed in Publication 15-T, Federal Income Tax Withholding Methods. For employees, the process begins with completing Form W-4, typically when starting a job or when circumstances change. Here’s how it operates:
If Form W-4 is not submitted, employers default to withholding at the Single rate with no adjustments, which may result in higher-than-necessary deductions.
The IRS advises employees to periodically assess withholding, particularly when life circumstances shift. Consider these scenarios:
Employees may update Form W-4 at any time by submitting it to the employer, who must implement changes within 30 days of the next payroll cycle.
When withholding appears misaligned, these steps can be followed:
For example: