The IRS in Your Pocket: Income Tax Withholding
For nearly 80 years now, most Americans have had federal income tax withheld from their wages through a system that has been in effect continuously since 1943. The current withholding legislation was enacted during World War II and was sold as the patriotic choice to help the United States win the war. The war ended with victory in 1945, yet the tax withholding conveniently remains, funding our federal government labyrinth.
Today, American workers know that their gross and take-home wages are two different things. They have accepted payroll withholding as a fact of life in our complex world of government taxation, and hope to avoid possible tax penalties — or worse — when taxes are due each year.
The Internal Revenue Service (IRS), which collects these taxes, has recently been making headlines with the passage of the so-called Inflation Reduction Act and the hiring of 87,000 new agents. Those agents are going to be looking to ensure the federal government gets its “fair share” of your hard-earned income, as some Americans have found ways to avoid paying their taxes in full.
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