Money in Real Life · 45 sec
Tax withholding
A practical idea for making clearer everyday money decisions.
The useful idea
- The useful idea
Tax withholding, also known as tax retention, pay-as-you-earn tax or tax deduction at source, is income tax paid to the government by the payer of the income rather than by the recipient of the income.
- How it works
The tax is thus withheld or deducted from the income due to the recipient.
- Why it matters
In most jurisdictions, tax withholding applies to employment income.
Why this matters
Use Tax withholding to compare the trade-offs before committing money.
Try this
Use Tax withholding to compare the trade-offs before committing money.
Test your recall
Which idea belongs to the explanation of Tax withholding?
- Why it matters
- How it works
- The useful idea — correct
Tax withholding, also known as tax retention, pay-as-you-earn tax or tax deduction at source, is income tax paid to the government by the payer of the income rather than by the recipient of the income.
General education only — not personal financial advice.