# Withholding

*Taxes — Finicade finance glossary*

Withholding is tax your employer deducts from each paycheck and sends to the tax authority on your behalf. It exists to make collection automatic and painless, and it's why most employees never write a tax cheque. Getting it wrong in either direction costs: under-withhold and you face a bill plus possible penalties, over-withhold and you've lent money for free all year.

**Also known as:** tax withholding, PAYE, pay as you earn

**Related terms:** [Form W-4](https://finicade.com/glossary/form-w-4), [Tax Refund](https://finicade.com/glossary/tax-refund), [Pay Stub](https://finicade.com/glossary/pay-stub), [Estimated Tax Payments](https://finicade.com/glossary/estimated-tax-payments), [Payroll Tax](https://finicade.com/glossary/payroll-tax)

Source: https://finicade.com/glossary/withholding