So I just realized that I claimed "Exempt" on both my Federal and Georgia taxes on my W-4. Obviously my paychecks had nothing being cut out from them in terms of Federal or State Taxes..
I've gone and fixed the error on my company's website by doing a new W-4 today 4/13/14.. my question is I have 7 paychecks given to me since December of last year from my new Job which did not have any taxes cut out from them..
I make 54,000 a year and $2,076 per paycheck on a biweekly basis..
If my math is correct it seems I should have had about $500 total cut out (Federal + State) which that means I haven't paid $3151 ~ on those 7 paychecks..
What will the government do about that? Will I have to pay that in lump-sum at the end of the year? Will I get fined? How I can avoid any issues!?
Please HELP!
Answers & Comments
Going by the IRS Withholding calculator and what you state in your question, you will be $737 short at the end of the year even after you change your W-4 to Single/zero allowances for this pay period.
According to www.PaycheckCity.com your total Federal Income Tax liability for 2014 will be about $8800 and Georgia will want $2900 for the year.
That assumes you are single with no dependents and your deductible expenses do not exceed $6200 and you have to use the Standard Deduction rather than Schedule A next spring.
You COULD complete a new W-4 with S/0 and have an extra $40/payperiod withheld each of the next 20 paychecks. Or you could go to www.IRS.gov and search for 1040-ES and print out the form and read the instructions for it. The address for mailing your payment is in the instructions.
You would need to do something similar with the Georgia taxes. Go on line to get the estimated tax form and instructions for the state and do the same as federal unless you want to have extra taken out of your paychecks as you go through the year.
IF you fail to get caught up on the withholding and wait until year-end to pay the shortfall, there will be penalties and interest on underwithholding if you have to pay more than $1,000 to the IRS with your 2014 tax return unless your total withholding for this year equals what your income tax was last year. Georgia will have a lower standard.
It is good that you caught the error now rather than this coming December!
How much did you make in 2013? That is the issue that could burn you.
For 2014, just do a dummy tax return, figure out how much your tax liability will be, then adjust your withholding accordingly. {see the line that says "extra amount to withhold ____ ?} No need to make quarterly payments. Lots of people deliberately do what you accidentally did (except the "exempt" part - - and is partly why I tell people to never say "exempt.")
Just a little snark: $54,000 a year, and you finally paid attention to your pay check. [In other words, be more diligent in the future.]
You could choose to have some additional $$$ amounts out of each pay check to try and make up for the shortage for the rest of the tax year and MAKE sure that the payroll department does understand that this will have to be for the FIT and the SIT amount for that purpose and time for the rest of the 2014 tax year for each pay period.
Hope that you find the above enclosed information useful. 04/13/2014
You can have extra taken out of your remaining paychecks for the year to cover it, or just send in estimated payments.
If the new W4 is set to single and 0, you should still be fine.