What happens to the money that your employer withholds from your paycheck?

Question

Your employer sends it to the federal government to help pay your income tax bill.

Your employer holds it in case you damage any property.

Your employer returns it to you at the end of the year so that you can pay your federal taxes.

Your employer holds it until you leave your job and then returns it to you.

Answer 1

The correct answer is: Your employer sends it to the federal government to help pay your income tax bill.

When your employer withholds money from your paycheck, it typically includes federal income tax, Social Security tax, and Medicare tax. These amounts are sent to the government on your behalf to help cover your income tax obligations and other federal liabilities. When you file your tax return at the end of the year, you will reconcile the amount withheld with your actual tax liability, which can result in a refund or additional payment depending on your overall tax situation.