help with witholdings

[wendybooth]

Client this yr single no dependants. I have done return for 5 years. Has had always in the past had extra taken out of check for taxes so that she does not owe at end of year. In past have calculated within a few dollars. This year company changed or incorrectly entered the withholdings so not enough taken out. Client has NOT changed anything with company. Is there anyway that the company be held responsible for the penalty or taxes? I don't think they can but just trying to see if client has a leg to stand on.

[Wayne Brasch]

Client this yr single no dependants. I have done return for 5 years. Has had always in the past had extra taken out of check for taxes so that she does not owe at end of year. In past have calculated within a few dollars. This year company changed or incorrectly entered the withholdings so not enough taken out. Client has NOT changed anything with company. Is there anyway that the company be held responsible for the penalty or taxes? I don't think they can but just trying to see if client has a leg to stand on.

Did your client file a Form W-4 with that employer for 2007?

Wayne

[jainen]

>>anyway that the company be held responsible for the penalty or taxes?<<

It is inconvenient to have a balance due, but she is not really harmed because she has had more money to spend each month. She won't owe a federal penalty unless she is $1000 short, and you'd have thought she would notice that big a change in take home pay.

[Julie]

The most likely answer is that client isn't telling you that she changed her W4 during the year, usually because a co-worker told her she'd get more money. I mention this whenever I see grossly low withholding, and the client generally admits to this. I hate to be cynical about this sort of thing, but I don't recall any client ever volunteering that information.

They had to have a W4 on file in order to have hired her. It's pretty hard to see how the company could be held responsible unless the company stole the money, (i.e., her W2 and pay stubs do not match). If she receives the money, she's responsible to pay the taxes.

Client this yr single no dependents. I have done return for 5 years. Has had always in the past had extra taken out of check for taxes so that she does not owe at end of year. In past have calculated within a few dollars. This year company changed or incorrectly entered the withholdings so not enough taken out. Client has NOT changed anything with company. Is there anyway that the company be held responsible for the penalty or taxes? I don't think they can but just trying to see if client has a leg to stand on.

[wendybooth]

Thanks for all responses. This employer had one client last yr as married without her knowledge (she says) but she never changes her w4. Same with this client. The w2 and check stubs match but I still feel it the employers neglect because she never changed her w3 from previous. This client however is more reliable than the other maybe I am too gulliable.

[jainen]

>>I still feel it the employers neglect<<

I wouldn't argue against that. Unless the company has a regular payroll service, the data clerk is probably a low-paid, untrained bookkeeper. One misstroke, and the error disappears into cyberspace until the employee complains and makes them look it up again. But so what? You're still stuck with the result.

Another thing to remember is that things DID change. The tax rates (and withholding tables) are indexed for inflation. If she got any kind of raise or bonus, took days off, had a 401(k), contributed to a medical plan, or a dozen other things, you can't predict where that will land on the new tables -- assuming the employer even bothered to buy new tables.

[kcjenkins]

The point is that the worker has not cause for action against the employer, because she got the check, and the pay-stub, and if her withholding dropped she had the responsibility to ask questions at the time. She has not been harmed, unless the shortfall is more than $1000, because there is no penalty. And since she got the extra money, not the employer, it's now up to her to use it to pay the tax. And the good thing is, she now knows how much, and she has two and a half months to save up the amount she needs. And, of course, to go make sure she files a new W4 and lets the employer know of the problem.

[Terry O]

I had a similar situation a number of years back. Apparently the large payroll company erred and changed all the single taxpayers to married status .

EVERY person at the business had owed for the first time ever. NO ONE changed their W-4's and the payroll company response - -

"You should have realized there was less being withheld every pay".

[joanmcq]

Of course, every year for a few years they were doing wierd things with the withholding with the government lowering the tax rates and the withholding tables. So if it was done at the beginning of the year, who would know if too little was being withheld because of the screwy things being done to the withholding. So even if someone noticed, its likely the payroll department would say the tables changed and the employees would think whoopee! I get more money now! Isn't our government great?

[kcjenkins]

I do agree that the withholding often does change from year to year, due to changes the government makes in the withholding formulas. However, the employee does have some responsibility, if it changes significantly, to check it out. After all, be honest, if the amount had changed significantly IN THE OTHER DIRECTION, MORE HELD OUT, don't you believe that the client would have asked lots of questions?

[joanmcq]

Yeah, I know. But I was doing payroll during some of those swings and it was whacked when the withholding changed mid year. I think that was the year of the famous rebates.

Way back, I got commissions at one job. I did make a stink when they weren't taking squat out of my bonus checks; not nearly as much as out of the regular ones. They said not to worry. I owed at the end of the year. Boy was I pissed. Then I raised a bigger stink. Seems the bonus checks were calculating as though that was all the money I was getting (like having two jobs will screw up your withholding). But it was the same company. So I do have some empathy. Not that I think the TP above has any recourse.