Federal Income Tax Withholding (FITW) is the amount of money taken from an employees wages to cover federal income taxes. It is the process when employers withhold a portion of an employees wages to pay for federal income taxes. Employers use the information provided by the employee on their completed and signed Form W-4, the amount of the employee’s taxable earnings, and the frequency the employee is paid to determine the amount of federal income tax to withhold from each paycheck. The FITW is calculated based on the employees income, filing status, and the number of allowances claimed on the W-4 form. The FITW is reported on the employees W-2 form in box 2. The FITW is sent by the employer to the IRS on behalf of the employee. The goal is to have at least enough FITW during the year to cover the expected federal income tax liability. If an employee does not have enough FITW, they may owe taxes at the end of the year. If an employee has too much FITW, they may receive a refund. The FITW is just one of the many different federal and state tax withholdings that are taken from an employees paycheck.