Failing to avoid over- or under-withholding federal income tax on your paycheck can have serious ramifications. If you do not withhold enough, you may owe a large amount of money at the end of the year when you file your taxes. This can be a financial burden and can also result in penalties and interest charges. On the other hand, if you over withhold, you may receive a refund, but you will also have given the government an interest-free loan of your money. Furthermore, if you are expecting a refund, you may have to wait longer for your refund if you over withhold, as the government will need to process the refund. It is important to be aware of the amount of federal income tax you are withholding from your paycheck in order to avoid any potential issues.