Question

why is withholding tax necessary?
it will increase both the gross and net pay that an employee will receive.
many individuals will spend their paychecks without setting aside enough money to pay taxes.
the federal government charges more income taxes when it is paid annually rather than monthly.

Explanation:

• For the first option: Withholding tax reduces net pay (as it's a deduction), so it can't increase net pay, making this option incorrect.
• For the second option: Withholding tax is necessary because people might spend all their paychecks and not save enough for tax payments, so employers withhold a portion to ensure taxes are paid.
• For the third option: The federal government does not charge more taxes based on annual vs. monthly payment; the tax liability is based on income, not payment frequency, so this is incorrect.

Answer:

Many individuals will spend their paychecks without setting aside enough money to pay taxes.