Introduction This chapter discusses how to pay your U.S. income tax as you earnor receive income during the year. In general, the federal income taxis a pay as you go tax. There are two ways to pay as you go. Withholding.cheap hotels in Gmunden If you are an employee, youremployer probably withholds income tax from your pay. Tax may also bewithheld from certain other income--including pensions, bonuses,commissions, and gambling winnings. In each case, the amount withheldis paid to the U.S. Treasury in your name. Estimated tax. If you do not pay your tax throughwithholding, or do not pay enough tax that way, you might have to payestimated tax. People who are in business for themselves generallywill have to pay their tax this way. You may have to pay estimated taxif you receive income such as dividends, interest, rent, androyalties. Estimated tax is used to pay not only income tax, butself-employment tax and alternative minimum tax as well.