no income tax withheld by employer on W2

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Latest post 02-12-2007 8:53 PM by LdiJ. 4 replies.
  • 02-12-2007 5:04 PM

    • sues
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    Question [=?] no income tax withheld by employer on W2

    Last year, my husband worked for about 9 months for an employer, and then changed jobs toward the end of the year. He never looked too closely at his check stubs (unfortunately) and unbeknownst to him, the 1st employer (whom he worked for most of the year) did not withhold any income tax from his paychecks. We didn't discover this fact until he received his W-2 and realized there was no amount in the box marked income tax withheld. My husband was able to find a few of his paystubs from that employer, and sure enough, the employer only withheld FICA and social security taxes from his paychecks. I realize that my husband will be responsible for paying the income tax that was never paid in throughout the year, but does his former employer have any responsibilty in this? Aren't employers required by law to withhold income taxes from employees pay? Any information anyone can provide about this would be great! We are very upset about this situation and are COMPLETELY unprepared to have to pay almost a whole year's worth of taxes.
  • 02-12-2007 5:29 PM In reply to

    re: no income tax withheld by employer on W2

    According to a quick google search, the employer is subject to the penalty of 1.5 percent of wages paid, plus interest compounded daily for failure to withhold income taxes.

    If you pay state or local income tax, the taxing authorities may also have a penalty for the employer failing to withhold.

    You may get some satisfaction from reporting the employer, but that's not going to help the guy who didn't bother looking at his pay stub.
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  • 02-12-2007 6:15 PM In reply to

    • LdiJ
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    re: no income tax withheld by employer on W2

    That may not be the case here. I can't imagine why an employer would withhold social security and medicare taxes but not withhold federal income taxes. It provides no benefit to the employer to not do so. It doesn't save the employer any money or require fewer tax forms to be filed.

    What is more likely is that the husband put enough exemptions on his W4, that no federal taxes calculated as needing to be withheld.
  • 02-12-2007 6:52 PM In reply to

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    Sad [:(] re: no income tax withheld by employer on W2

    I don't think that is the case because he never has changed his number of exemptions and has always had income tax withheld from all employers he has ever worked for. Could it be possible that this employer (who is a small business owner) just doesn't know what he is doing? Plus, income tax has been withheld from his other employer's W-2 in which he claimed the same number of exemptions.
    Well, regardless, the only recourse he has seems to be reporting the employer's failure to withhold the taxes, is that correct? And all that will do is subject this employer to penalities from the IRS. Oh well. I know he will be checking his paystubs MUCH closer now (as will I)!!
  • 02-12-2007 8:53 PM In reply to

    • LdiJ
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    re: no income tax withheld by employer on W2

    Its possible if the small business owner is doing payroll by hand.

    However, most small business owners use a payroll service or payroll software, which means that an error shouldn't be made.

    If you would care to share how often he was paid, his gross salary per payroll, and the number of exemptions he claimed on his W4, I would be happy to tell you whether or not the employer should have been withholding taxes.
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