DayCents

Withholding

Withholding is the income tax your employer takes out of each paycheck and sends to the IRS on your behalf, based on the W-4 you fill out. Get it right and you roughly break even at tax time; too little means a bill, too much means a refund of your own money.

A big refund isn't a win — it means you gave the government an interest-free loan all year. Adjusting your W-4 after a raise, marriage, or new child keeps withholding aligned with what you actually owe.