Optional Withholding

If your employer sponsors a traditional retirement savings plan, like a 401(k), a 403(b), or a SIMPLE, you can defer part of your gross pay into the plan. This postpones the tax that’s due on that part of what you earned, reducing your current tax bill. You may also be able to put pretax income into a flexible spending plan to pay certain medical bills, childcare, and other qualifying expenses, or into a health savings account if your employer offers either of them.

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Taxing details

The US Congress passes the federal tax laws that make up the Internal Revenue Code (IRC). It also sets the tax rates and authorizes how tax money is spent. The Internal Revenue Service (IRS), which is part of the Department of the Treasury, interprets the code and collects the taxes.

This content is provided as educational material only and is not intended to solicit you for any product or service. These materials are not a recommendation by HSBC for any product, service or financial strategy. The suggestions and recommendations contained within are general in nature, and may or may not apply to your particular circumstances. Securities, annuity and insurance products are not FDIC insured or insured by any federal government agency of the United States; subject to investment risk, including possible loss of principal invested. All decisions regarding the tax implications of your investment(s) should be made in connection with your independent tax advisor. Should you need further assistance, HSBC strongly recommends contacting an independent attorney, tax professional or financial consultant.