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Question
I have a w2 job and they just told me I don't have a w-4 in (apparently we have to do it every year and I missed the memo). I don’t think any federal tax has been withheld from my checks all year. How do I rectify this so I don’t get penalized?
- Anonymous
Answer
First, review your most recent paystub to confirm whether any federal income tax was withheld. There is no requirement from the IRS that W-4s must be provided each year. They are only needed when a employee begins working or if there are changes in the employee's withholding status (i.e. single to married). If you have an old W-4 on file with your employer, they should be using that information to calculate your income tax withholding. And if you never filled one out, they should have used the default withholding amount which is single, non-exempt. However, if after reviewing your most recent pay stub and you find that no federal income tax has been withheld for the entire year, you'll likely need to make an estimated payment by January 15, 2021 if you expect to owe more than $1,000. To avoid an underpayment penalty, you'll need to pay the smaller of 100% of the tax shown on your 2019 return or 90% of the tax you expect to owe for 2020. But start with talking with your payroll department today to get this corrected for 2021.

Melissa Pedigo

Melissa Pedigo has been a CPA for over 20 years and she is one of the only CPA copywriters in the world. With a vast knowledge of U.S. tax and accounting, she’s able to write about tax and finance topics from a unique perspective...as an industry expert. When she’s not writing or being an accounting nerd, you’ll find her watching and playing tennis, reading, tending to her half-grown garden, and studying foreign languages

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