Overwithholding

AAA

DEFINITION of 'Overwithholding'

A generic term referring to an excess amount of tax being withheld for an employee or retirement plan participant throughout the year. Overwithholding can apply to both income and Social Security taxes. Any amount of overwithholding is sent back as a refund to the taxpayer after he or she has filed a return.

INVESTOPEDIA EXPLAINS 'Overwithholding'

Overwithholding is also known as excess withholding. This commonly occurs when there is an overexpectation of your yearly income, which could be caused by large bonuses or above average lump sum payments. Overwithholding of Social Security benefits is refunded back to the taxpayer in the form of a refundable tax credit.

RELATED TERMS
  1. Underwithholding

    Inadequate withholding of taxes from wages or other income during ...
  2. Federal Tax Brackets

    Income tax groupings specified by the Internal Revenue Service ...
  3. 1040 Form

    The standard Internal Revenue Service (IRS) form that individuals ...
  4. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  5. Taxes

    An involuntary fee levied on corporations or individuals that ...
  6. Refund

    A payment from the government for an individual's overpaid taxes. ...
Related Articles
  1. 5 Smart Ways To Use Your Tax Return
    Taxes

    5 Smart Ways To Use Your Tax Return

  2. Tax Credit For Plan Expenses Incurred ...
    Entrepreneurship

    Tax Credit For Plan Expenses Incurred ...

  3. Next Season, File Taxes On Your Own
    Taxes

    Next Season, File Taxes On Your Own

  4. 10 Money-Saving Year-End Tax Tips
    Taxes

    10 Money-Saving Year-End Tax Tips

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center