Tax Tips — March 09, 2022

My Employer Didn’t Withhold Enough Taxes—What Do I Do?

by Susannah Hornback

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My Employer Didn’t Withhold Enough Taxes—What Do I Do?

When you work for an employer—meaning you’re formally hired as an employee, not an independent contractor—they are required to withhold money from your paychecks to cover your income taxes.

At the end of the year, they add up everything you’ve earned and everything you’ve withheld and send it on a Form W-2.

But sometimes, something’s weird.

You notice that, even though your employer withheld taxes from each paycheck, you still end up with taxes owed. What gives? Whose fault is it? And who has to pay that leftover amount?

Bad news first: Even if your employer didn't withhold enough, you’re responsible to pay all your taxes owed.

Paycheck withholding is in place to make sure you don’t have to pay all your taxes for an entire year in one go when you file. That would be a massive bill, and who has that kind of money lying around at any given point?

Still, the amount of taxes you owe is calculated once the year is done, and it’s based on all your life, income, expense, and status changes. Withholding can’t predict all of those, and sometimes it doesn’t cover all your taxes owed.

It’s not necessarily anyone’s fault, but paying your full taxes is ultimately your responsibility.

The good news: You can increase your withholding to avoid a tax surprise next year.

To make sure your withholding is more accurate next year, you can fill out an updated Form W-4 and send it to your employer.

A Form W-4 is really straightforward. All you’ll need is:

  • Contact information (like name and address)
  • Filing status
  • How many dependents you’ll claim
  • The total value of deductions you plan to claim
  • The total of any extra amount you want to have withheld

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