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.

BREAKING DOWN '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.

  1. Underwithholding

    Inadequate withholding of taxes from wages or other income during ...
  2. Taxes

    An involuntary fee levied on corporations or individuals that ...
  3. Social Security Administration ...

    A U.S. government agency created in 1935 by President Franklin ...
  4. Internal Revenue Service - IRS

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

    A payment from the government for an individual's overpaid taxes. ...
  6. 1040 Form

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