Withholding and Estimated Tax

Withholding is the tax collected during the year from income payments, most commonly from wages through payroll.

Estimated tax is tax paid directly during the year in periodic installments when withholding alone is not expected to cover enough tax.

Federal income tax withholding is the portion of tax withheld from paychecks or other payments and sent toward the taxpayer's federal income tax bill.

Backup withholding is federal income tax withheld from certain nonwage payments when TIN or certification problems affect reporting.

The underpayment penalty is a penalty that can apply when a taxpayer does not prepay enough tax during the year through withholding, estimated payments, or both.

Pay-as-you-go tax terms for paycheck withholding, estimated payments, and underpayment risk.