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Employer neglected to withhold Fed. taxes

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CMSC

Senior Member
What is the name of your state? KY

When preparing my taxes I noticed on my W2 that no federal taxes were listed. I've only worked for my employer for 6 months and don't make alot but figured some taxes should have been taken out. I never paid attention to the checks and what was being withheld, clearly my fault. However, I'm the 4th employee in the past year this has happened to. Is the employer in anyway responsible for any fee's/penalties I may incur?
 


A

abezon

Senior Member
CMSC said:
I've only worked for my employer for 6 months and don't make alot but figured some taxes should have been taken out.
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Why? If you don't make alot, maybe you have no taxable income & therefore don't need to pay into the system. It is possible your employer calculated your withholding correctly based on your W4 & income for each paycheck, & you simply didn't have to pay anything.
 
C

CMSC

Senior Member
I have no clue what fees/penalties I may incur, I know of people have to pay a penalty for not paying federal taxes, so I was just asking to be prepared.

My boss told me federal taxes should have been taken out, that the "payroll company mess up again".

Thanks for the response. I don't like that they keep "accidentally" doing this to employees but can't see how they would benefit from not withholding taxes.
 
M

moburkes

Senior Member
CMSC said:
I have no clue what fees/penalties I may incur, I know of people have to pay a penalty for not paying federal taxes, so I was just asking to be prepared.

My boss told me federal taxes should have been taken out, that the "payroll company mess up again".

Thanks for the response. I don't like that they keep "accidentally" doing this to employees but can't see how they would benefit from not withholding taxes.
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Abezon made a good point about your income. You say that you don't make a lot (low income), which means that you might not have an obligation for federal taxes. Unless someone is manually doing payroll, these mistakes generally don't happen. What IS your annual income? Have you don't your taxes, or at least used tax software to see if federal taxes are outstanding? Usually, people only pay penalties for owing federal taxes if they are late.
 
P

Paddy Reagan

Member
Even if your income is modest, the employer is obligated to withhold a portion of your income to cover Social Security and Medicare contributions. In 2007, this equates to 7.65% of ALL income from wages. Because the employer must pay an identical matching amount, it's not uncommon for them to "forget" to withhold. Another common tactic is to withhold nothing and issue a statement of income called a "1099" at the end of the year.

At that point YOU must pay all of the social security, (a total of 15.3%) plus any Federal tax you owe on the net income after deductions and allowances. In 2007 the personal exemption is $3,300 and, if you don't itemize, a standard deduction of $5,150 is available. Stated simply, it's unlikely that you'll owe any Federal tax if you earn $8,450 or less.

If your income increases and your employer continues to avoid withholding, you have the option of paying quarterly estimated taxes. Otherwise, any penalty by the IRS would be a small amount calculated after you file your tax return in 2008 for underwithholding.
 
M

moburkes

Senior Member
Paddy Reagan said:
Even if your income is modest, the employer is obligated to withhold a portion of your income to cover Social Security and Medicare contributions. In 2007, this equates to 7.65% of ALL income from wages. Because the employer must pay an identical matching amount, it's not uncommon for them to "forget" to withhold. Another common tactic is to withhold nothing and issue a statement of income called a "1099" at the end of the year.

At that point YOU must pay all of the social security, (a total of 15.3%) plus any Federal tax you owe on the net income after deductions and allowances. In 2007 the personal exemption is $3,300 and, if you don't itemize, a standard deduction of $5,150 is available. Stated simply, it's unlikely that you'll owe any Federal tax if you earn $8,450 or less.

If your income increases and your employer continues to avoid withholding, you have the option of paying quarterly estimated taxes. Otherwise, any penalty by the IRS would be a small amount calculated after you file your tax return in 2008 for underwithholding.
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I took this to mean that ONLY federal taxes were missing. Are you saying that if federal taxes were missing, that the other taxes couldn't have been paid?
 
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