Overwithholding

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.

RELATED TERMS
  1. Refund

    A payment from the government for an individual's overpaid taxes. ...
  2. Tax Refund

    A tax refund is a refund on taxes paid to an individual or household ...
  3. Form 843: Claim For Refund And ...

    A tax form distributed by the Internal Revenue Service (IRS) ...
  4. Tax Refund Anticipation Loan - ...

    A loan provided by a third party against a taxpayer's expected ...
  5. Tax Return

    1. The tax form or forms used to file income taxes with the Internal ...
  6. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
Related Articles
  1. Personal Finance

    What's IRS Form 1040 For?

    Most U.S. taxpayers will be familiar with the 1040. By the end of filling it out, you'll know how much tax you owe, or what your refund is.
  2. Personal Finance

    IRS Refund Lost? Here's What to Do

    Don't panic. There are a number of reasons your refund might be delayed – and solutions for each.
  3. Personal Finance

    Tax Credits That Can Get You a Refund

    Here are a few of the credits that may result in a refund check, even if you owe no taxes this year.
  4. Personal Finance

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  5. Personal Finance

    Tax Withholding: Good For Government, Bad For Taxpayers

    It's important to understand where that money coming out of your paycheck goes and why - after all, you earned it.
  6. Personal Finance

    The First Thing You Should Do With Your Tax Refund

    Nobody likes to pay taxes, but everyone loves to get a tax refund. When the check arrives in the mail, it's hard to resist spending it on some indulgence.
  7. Personal Finance

    12 Reasons Your IRS Refund Was Late

    A tax refund can be a nice post-tax reward, but if it's taking too long to arrive, here are the most likely reasons for the hold-up and how to check on it.
  8. Personal Finance

    What is Withholding Tax?

    Withholding tax is the income tax federal and state governments require employers to withhold from employee paychecks.
  9. Personal Finance

    Understanding The U.S. Tax Withholding System

    Understanding the origins of our tax withholding system is crucial to getting the most out of it.
  10. Personal Finance

    Refund Anticipation Loans Generally A Ripoff

    These short-term loans can provide much-needed cash, but the instant payout comes at a cost.
RELATED FAQS
  1. Can the IRS withhold your tax refund?

    Learn about the instances in which the IRS can levy your federal and state income tax refunds, and find out how the levy ... Read Answer >>
  2. Why did a mandated IRA withdrawal take away my 2015 tax refund?

    I completed my taxes and was due a sizable refund, until I remembered to add an IRA distribution from an IRA bequeathed to ... Read Answer >>
  3. When should my tax refund arrive?

    Read about how long it takes the IRS to process your income tax return and what factors could delay receiving your tax refund. Read Answer >>
  4. How do I get a split tax refund?

    You don't have to receive your tax refund in a lump sum. Learn the options you have for splitting the money the IRS owes ... Read Answer >>
  5. What are the benefits of splitting my tax refund?

    If you receive a refund when you file your tax return, there are some convenient options you can take advantage of. Read Answer >>
  6. What is the optimal level of withholding tax to enter on my W-4?

    Learn about the federal governments payroll tax withholding scheme and how it affects your paycheck, including how to determine ... Read Answer >>
Hot Definitions
  1. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  2. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  3. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  4. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  5. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
  6. Real Rate Of Return

    The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other ...
Trading Center