Federal Income Tax Withholding (FITW)

What is Federal Income Tax Withholding (FITW)?

Federal Income Tax Withholding (FITW) is the process by which employers deduct a portion of an employee’s wages to prepay the employee’s federal income tax liability. The amount withheld is based on the employee’s earnings, filing status, and information provided on Form W-4. These funds are sent to the IRS periodically and are credited toward the employee’s annual tax obligation, helping to prevent a large tax bill at the end of the year.