The tax and revenue agencies of many countries employ the Pay As You Earn (PAYE) system, in which money is deducted from paychecks by the employer and remitted to the government with regular paychecks as they are earned. Any sum taken in excess of the amount of tax due it repaid to the taxpayer. If there is a shortfall between how much tax was paid and how much was actually due, the taxpayer will have to make up the difference once they file their annual tax return document.

The PAYE system was originally developed in 1944 by Sir Paul Chambers in the United Kingdom. Such a system for collecting and paying taxes may also be referred to as “”pay as you go,”” a term more prevalent in the United States.

Pay as you earn (PAYE) refers to a repayment or withholding scheme that incrementally makes deductions as paychecks are received.

For income tax withholding, employees that elect automatic withholding see pre-payments made to federal and/or state taxing authorities with each paycheck. Those who over-withhold get a tax refund at the end of the year.

In reference to student loans, PAYE takes out 10% of discretionary income as it is earned, and generally lasts up to 20 years.

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