Underwithholding

Dictionary Says

Definition of 'Underwithholding'

Inadequate withholding of taxes from wages or other income during the year. Underwithholding will result in a balance due upon filing. Significant underwithholding can result in a nasty surprise for the taxpayer, especially if there is substantial interest and penalties involved. Generally, it is often a good idea to overwithold taxes to avoid a financial surprise at filing time that could become a significant financial burden.
Investopedia Says

Investopedia explains 'Underwithholding'

Some taxpayers deliberately choose to have their taxes underwithheld, for various reasons. Sophisticated taxpayers may be able to invest the amount that would otherwise be withheld more profitably throughout the year and still come out ahead after paying the tax. Others simply may not wish to have the government hold on to their money during the year and keep it in a separate account to earn interest instead.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Taxes

    An involuntary ...
  2. Withholding

    The portion of ...
  3. Tax Refund

    The return of ...
  4. Tax Return

    1. The tax form ...
  5. Overwithholding

    A generic term ...
  6. Nominee Interest

    An interest ...
  7. Amended Return

    A return filed ...
  8. Tax Home

    The general ...
  9. Income Shifting

    A strategy of ...
  10. Electronic Filing - E-File

    The process of ...

Articles Of Interest

  1. 3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  2. If an employee is paid by commission, who is responsible for withholding taxes?

  3. 5 Retirement Plan Moves To Make Before Year-End

    Make sure all your loose ends are tied with these simple reminders and tips for your plans.
  4. Next Season, File Taxes On Your Own

    Master these fundamentals and you'll be doing your own taxes with minimal stress.
  5. Small Business Tax Obligations: Payroll Taxes

    Don't leave it up to your accountant - owners are ultimately responsible for fulfilling tax obligations.
  6. Why does the IRS withhold income taxes from employee paychecks?

  7. Present Your Clients With A Year-End Review

    If you want to build a better rapport with your clients, this is a good place to start.
  8. Benefits Of A Dependent Care FSA

    Here's how your Dependent Care FSA works and how you can use it to your advantage as a parent with dependents.
  9. How To Reduce Taxes On ETF Gains

    Boost your returns by learning the tax tricks and loopholes for your exchange-traded funds.
  10. Income Relating: A New Concept In Medicare

    You can retire, but you can never retire from income tax planning.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center