What are the two primary methods for making payments towards your taxes throughout the year?

Withholding and Estimated Tax Payments are indeed the two primary methods for making payments towards your taxes throughout the year.

When employed, withholding refers to the process where employers deduct a portion of an employee's wages for tax purposes before the employee receives their paycheck. This amount is sent directly to the IRS and can help individuals meet their tax liabilities gradually over the year, preventing a hefty bill at tax time.

Estimated tax payments, on the other hand, are typically made by individuals who do not have sufficient taxes withheld or who receive income that is not subject to withholding, such as self-employment income, rental income, or investment income. These payments are made quarterly and help ensure that taxpayers meet their tax obligations as they earn income.

Both methods are essential as they allow taxpayers to contribute towards their tax liabilities in a structured manner, promoting financial planning and reducing the risk of underpayment penalties when filing tax returns.