Overwithholding


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Overwithholding

Deducting and paying too much tax that may be refunded to the taxpayer or applied against the next period's obligation.

Overwithholding

A situation in which an employer withholds too much money from an employee's paycheck and gives the funds to the tax agency. This occurs when the employee does not make enough to qualify for the tax bracket used on the paycheck, or when the employee takes enough itemized deductions for which the withholding does not account to reduce his/her tax liability. Overwithholding usually results in a tax refund or in the application of the amount to next year's taxation.
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Overwithholding reduces the amount of monthly discretionary cash flow that can be used to meet other financial goals and objectives.
Overwithholding is perceived as a gain, and underwithholding is perceived as a loss.
Some of the differences between liabilities and payments may be due to the overwithholding that reflects the type of withholding.
tax rates and their progressivity, and psychological factors, including framing effects from under- or overwithholding.
Other mechanisms consumers commonly use that can be characterized as forced savings are the overwithholding of income taxes to ensure a refund and the accumulation of home equity through mortgage payments and property appreciation.
This behavior is similar to the use of overwithholding by many middle-income taxpayers as a means of "forced savings" (Barrow & Granahan, 2000; Neumark, 1995).
They also report a withholding phenomenon, namely that behavior differs, depending on a person's tax balance and respective underwithholding with additional payment or overwithholding with returns.
To aid in cash flow and avoid overwithholding, taxpayers expecting to claim the credit should indicate such intent to their employers.
Second, if you expect a refund of taxes due to overwithholding or excess estimated payments, you can file your return in time to get your refund before funding an IRA or Keogh.
However, this result would lead to overwithholding, since parruer A would be able to utilize the passive income generated from the real estate activity to offset the passive loss generated from the advisory business.
This type of fraud can take many forms including using pension funds assets and overwithholding or underfunding pension costs.
However, those transferee determination requests can only be made to cure overwithholding errors.