What does withholding and credit mean?

Hi Derionnaaa, thanks for posting an event question.

 

In a nutshell, the formula of Form 1040 is as follows:

determine your taxable income > tax liability (the total amount of income tax owed from taxable income > reduced by what you have paid in from withholding, such as the amount already paid to IRS from your employment paycheck by your employer > reduced by various credit allowed by tax rules, such as dependent credit (if you have dependent), various education credits (if you are in college and eligible) etc. > deriding a final number - balance due or a refund.

 

Through estimation such as TurboTax Tax Castor tool, 

https://turbotax.intuit.com/tax-tools/ 

generally, you must make estimated tax payments for the current tax year if both of the following apply:

• You expect to owe at least $1,000 in tax for the current tax year after subtracting your withholding and refundable credits.
• You expect your withholding and refundable credits to be less than the smaller of:
  • 90% of the tax to be shown on your current year’s tax return, or
  • 100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.

Estimated Tax FAQs

https://www.irs.gov/faqs/estimated-tax

Hope the above helps.

Thank you,

Kitty