Withholding and Estimated Taxes

Summary

This practice note discusses the two primary tax collection systems for the federal government—the tax withholding and estimated tax systems. This note first discusses the income tax withholding system, including the meaning of the key terms, wages, employee, and employer. The practice note then discusses the methods for computing federal income tax withholding amounts as well as the reporting requirements. A discussion of the estimated tax system follows, along with a discussion of backup withholding and withholding on gambling winnings.