Employer didn’t take out enough tax… what should I do?

So my employer didn’t withhold enough taxes even though my W-4 was filled out correctly (single, no dependents, no other income). I only have this job, got my W-2, and this keeps happening every year.

I know I’ll have to pay what’s owed, but is there any way to avoid or reduce the penalties? Also, how can I get my employer to actually fix this problem going forward?

If your employer won’t fix it, you could start making estimated quarterly payments yourself so you don’t get hit with penalties.

West said:
If your employer won’t fix it, you could start making estimated quarterly payments yourself so you don’t get hit with penalties.

Or you could update your W-4 and add extra withholding.

Try emailing HR and explain that you want to resubmit your W-4. Keep a record of the emails in case you need proof later. They’re supposed to let you correct it.

Hale said:
Try emailing HR and explain that you want to resubmit your W-4. Keep a record of the emails in case you need proof later. They’re supposed to let you correct it.

The W-4 is already correct. That’s what’s making this so frustrating.

@Sia
In that case, just request additional withholding.

What are the amounts in box 1 and box 2 of your W-2? That might give a clue about what’s going on.

Val said:
What are the amounts in box 1 and box 2 of your W-2? That might give a clue about what’s going on.

Box 1 shows $74,500 and box 2 shows $6,800. What can that tell us?

Sia said:

Val said:
What are the amounts in box 1 and box 2 of your W-2? That might give a clue about what’s going on.

Box 1 shows $74,500 and box 2 shows $6,800. What can that tell us?

That means it’s not an issue of selecting married or head of household, and it’s not from bonuses being underwithheld.

What did you select on your last W-4 for sections 1, 3, and 4?

@Val
Single, no dependents, no deductions, no extra income or withholdings. Everything on the W-4 and W-2 looks right, so I think it’s a payroll issue.

Sia said:
@Val
Single, no dependents, no deductions, no extra income or withholdings. Everything on the W-4 and W-2 looks right, so I think it’s a payroll issue.

You could add an extra withholding amount on your W-4. If they follow that, it might help you avoid dealing with their mistakes.

Are you hourly or salaried? Do you ever get overtime or bonuses?

Ari said:
Are you hourly or salaried? Do you ever get overtime or bonuses?

I’m salaried, full-time. No overtime, no commissions, no bonuses.

Sia said:

Ari said:
Are you hourly or salaried? Do you ever get overtime or bonuses?

I’m salaried, full-time. No overtime, no commissions, no bonuses.

How often do you get paid—weekly, biweekly, or monthly? And did you get any raises during the year?

With $74,500 in gross income and $6,800 in federal taxes withheld, did you have any pretax deductions, like for healthcare or retirement?

Rylan said:
With $74,500 in gross income and $6,800 in federal taxes withheld, did you have any pretax deductions, like for healthcare or retirement?

No, nothing like that. Box 1, 3, and 5 are all the same, and Medicare and Social Security were taken out correctly.

@Sia
When’s the last time you filled out a W-4?

It’s annoying when your employer messes up your withholding. If you end up owing more than $1,000 in taxes, the IRS could hit you with an underpayment penalty.

To avoid or reduce penalties, pay off as much of what you owe as quickly as you can. You might be able to avoid penalties altogether if your total withholding covers at least 90% of what you owe for this year or 100% of last year’s tax bill.

You can also submit a new W-4 with extra withholding, even if your current one is technically correct. Use the IRS Withholding Estimator tool to figure out how much extra to withhold.

You might want to follow up with HR again, but if they still don’t fix it, keeping a close eye on your paycheck after submitting the updated W-4 is probably your best bet.

Hope this helps.

@Ari
Thanks, this was really helpful. Unfortunately, even after multiple escalations, they’ve never fixed it.

The W-4 form changed a few years ago, and it’s been confusing for a lot of people. Yours sounds like one of the worst cases, especially since you filled it out correctly.

The IRS recommends checking your withholding midyear using their online tool and adjusting it if needed. It’s too late to fix last year, but for 2024, make sure you’re withholding enough or pay estimated taxes if needed.

To avoid penalties this year, make sure you pay at least 100% of what you owed last year or 90% of what you owe this year.