Tax deducted from each paycheque is an estimate, not a calculation of what is owed. The final bill is worked out on the whole year, and the two only align when the assumptions hold.
Withholding projects the year from one pay period
A payroll system knows this period's pay and the details on file. It cannot know what the rest of the year will look like, so it assumes the current pattern continues.
From that projection it estimates annual income, applies the expected rates and deducts a proportional share. Each period is a small instalment against a forecast total.
When the pattern holds, the instalments add up correctly. When it does not, the error accumulates quietly across the year.
Irregular pay breaks the projection
A bonus, overtime or commission in a single period inflates the projected annual figure. The system may deduct as though that level of pay will recur every period.
Starting a job mid-year has the opposite effect, because earlier periods with no income are not reflected in a forward-looking projection.
Both distortions usually correct themselves over the year or at filing, but they can make a single payslip look badly wrong in either direction.
Multiple sources of income compound the problem
Each employer withholds as though it is the only source of income, applying any lower bands or allowances afresh. Neither sees the combined total.
The result is systematic under-withholding, because relief intended to apply once has effectively been applied twice. The shortfall appears only when the sources are added together.
Self-employment, rental income and investment income sit outside payroll entirely, so nothing is withheld against them at all.
Personal circumstances are stale by default
Withholding depends on details supplied to the employer, and those details are only as current as the last update. A change in household status or dependants may not be reflected.
Deductions and credits claimed at filing are also invisible to payroll, so a taxpayer with substantial claims will consistently over-withhold.
The system corrects at reconciliation rather than in real time, which is why a refund is the return of an interest-free advance.
Adjusting the estimate rather than the outcome
Most systems allow the withholding instruction to be updated during the year, which changes the estimate rather than the liability. The tax owed is unchanged; only the timing moves.
Where income is genuinely outside payroll, instalment payments are often required, and rules on their timing and amount vary by jurisdiction and change over time.
Anyone with several income sources or a large one-off receipt should expect a mismatch and confirm the specifics with a qualified adviser for their own jurisdiction.