[maxerickson]

The US withholds taxes based on the amounts in the paycheck, but the actual tax is figured on annual income, so you either get the money back or given a predictable annual income, adjust the withholding (there is some risk of getting penalized for owing too much, so the predictable part matters).

[lovemetender]

Correct, this is in the US and in fact to the parent, we found we end up not with much less in our account making 80K instead of 120K. I suppose maybe if you go above 150K it might be better, not sure about that though.