Underwithholding

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Underwithholding

When a taxpayer has withheld too little tax from salary and will therefore owe tax when filing a return.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Underwithholding

A situation in which an employer withholds too little from an employee's paycheck; that is, the employer gives too little of the employee's wages or salary to the tax agency. This occurs when the employee makes enough to qualify for a higher tax bracket that the one used for the paycheck. Underwithholding results in the employee owing taxes at the end of the year.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
If it determines that an employee underwithholds, it will ask the employer to increase that person's withholding; see Temp.