• Income tax is a fixed amount of income tax that an employer deducts from an employee’s salary.
  • Employers pay withheld taxes directly to the IRS on behalf of the employee.
  • The money received is counted towards the employee’s annual income tax.
  • If too much money is withheld, the employee receives a tax refund or may have to pay the IRS if not enough is withheld.
  • Withholding tax is withheld from US residents and non-residents who earn money from US sources.