A more thorough explanation:

Tax withholding is when an organization keeps a portion of an individual's compensation to cover taxes on the income. This is done to ensure that the individual pays their taxes throughout the year, rather than owing a large sum at the end of the year.

The most common example of tax withholding is when an employer withholds a certain amount of income taxes from an employee's paycheck. This amount is then sent to the Internal Revenue Service (IRS) on behalf of the employee. Other examples of tax withholding include payments to individuals or entities in other countries, which ensures proper payment to the IRS.

For example, let's say an individual earns $50,000 per year from their job. Their employer withholds $10,000 in taxes throughout the year, leaving the individual with a net income of $40,000. At the end of the year, the individual will still need to file their taxes and may owe additional taxes or receive a refund depending on their overall tax situation.

Another example of tax withholding is when an individual receives interest income from a bank account. The bank may withhold a certain percentage of taxes on the interest earned and send it to the IRS on behalf of the individual.

Overall, tax withholding is an important part of the tax system that helps ensure individuals and organizations pay their taxes throughout the year.