Federal Income Tax Withholding - The Choice Is Yours

Federal Income Tax Withholding - The Choice Is Yours

Because our tax liabilities and estimated tax payments are unique to each of us, the tax law allows us to set our federal income tax withholding. Our withholding amount is influenced by specific factors such as marital status, family size, and itemized deductions. The tax law allows us to also withhold additional amounts or to claim exempt from withholding (meaning that no income tax will be withheld) if we had no tax liability in the prior year and anticipate no tax liability this year.

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Withholding agent is defined in 26 USC 1441 and is any person in custody and control of foreign persons US sourced income. W4 and W9 forms are withholding certificates. A US person (citizen or resident alien) uses a W-9 form which allows IRS to track the last person in custody and control of foreign persons US sourced income. The last person is liable for withholding tax prior to paying the foreign person.
US citizen earning domestic source income is not liable . It's only when you are in custody and control of foreign persons US sourced income that you become liable. Or if a US citizen earns foreign sourced income.