Taxes Not Being Withheld on Paychecks, W-4 Form Concern?

Question

I recently started a new job. I've received a few paychecks already and noticed that I am not getting any federal taxes taken out. Which I do not understand why. I am still getting Social Security & Medicare taxes taken out, but not Federal.

I fill out my W-4 the same way with every job. I am single. No kids or anything. Live with folks. And I don't work for much. I always write "Exempt" on Line 7. Same everything. And I usually get my taxes taken out. But not this time. Why? On the paycheck, at the very top it says "Federal: 0, Tax Blocked". I have no idea what that means. Or why that is there.

I 'did' however recently notice that on Line 5 of this W-4, that I have nothing written in. On Line H, I do have a "0". But nothing on Line 5. Would that matter?

And if not, then what?

I do not know what to do. Please help.

I've never had this happen before and am very concerned. My boss was explaining to me that since I have “Exempt” written on there that that means that I won’t get any taxes back. Which, when she explained it, makes sense. But what DOESN’T make sense is that I’ve always claimed exemption and I’ve always gotten my taxes taken out at previous jobs.

I was advised to maybe manually have an amount withheld, as in filling in Line 6, to be on the safe side. Come tax season, I do not want to find that I owe the IRS money. I was also told, however, that if I am working below a certain amount for the year, that I would not have to owe them money.

[Only serious responses, thanks.]

Thank you all for your responses so far.

You know, I really don't know why I claim "Exempt", I just always have done it that way. I think that I meet both of the conditions on Line 7: having a full refund from the previous year & expecting a full refund this year, with no tax liability.

Is there more I should consider than just those two conditions when deciding to claim exemption?

Thanks.

Answer 1

www.paycheckcity.com is a paycheck calculation website that I think you can use. It can calculate for you how much you should withheld from your paycheck. If you are claiming exempt on your W-4, then you won't have federal or state withholding taken out of your paycheck, but you still will have social security taxes (6.2%) and medicare taxes (1.45%) taken out. Claiming exempt on W-4 does not exempt you from those taxes.

Answer 2

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RE:
Taxes Not Being Withheld on Paychecks, W-4 Form Concern?
I recently started a new job. I've received a few paychecks already and noticed that I am not getting any federal taxes taken out. Which I do not understand why. I am still getting Social Security & Medicare taxes taken out, but not Federal.

I fill out my W-4 the same way with every job. I...

Answer 3

I do not think you understand what line 7 means by "no tax liability" or "full refund". It does not just mean owing nothing because you had enough withheld and getting a refund. It means having an income tax of $0000 so that everything withheld is refunded. If your tax is nothing, then you will not owe, even if nothing is withheld. If your tax is something, you are not exempt.

If your total income for the year will be less than or equal to the total of your exemptions and deductions (see Form 1040-ES [http://www.irs.gov/pub/irs-pdf/f1040es.pdf] for the figures for the current year; this year's 1040 is not yet available), then you do not need to have anything withheld.

If your total income for the year will be more than the total of your exemptions and deductions (see Form 1040-ES [http://www.irs.gov/pub/irs-pdf/f1040es.pdf ] for the figures for the current year; this year's 1040 is not yet available), then you cannot claim exempt.


Also, the instructions for the 2007 W-4 say:
"You cannot claim exemption from
withholding if (a) your income exceeds $850
and includes more than $300 of unearned
income (for example, interest and dividends)
and (b) another person can claim you as a
dependent on their tax return."

Answer 4

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Assuming that your spouse does not work, you should be claiming about 9 allowances. Just follow the instructions printed right on the Form W-4. You could trim that to 8 but anything less will have too much tax withheld from your pay. If your income is less than about $48,000, 10 should not be a problem as your federal income tax liability will be $0 anyway.

Answer 5

If you checked "exempt" in previous jobs and they still took out federal income taxes, then they ignored the "exempt" - what "exempt" says is you don't expect to owe any federal income tax, and didn't in the previous year, and the employer shouldn't deduct federal income tax. They will still or course take out social security and medicare, and depending on where you live, might take out state and/or local taxes.

If you are not a dependent of your parents, and your total income for the year will be under $8750, then you can probably claim exempt - if you will make more than that, then you can't.

Answer 6

Sounds to me that at your past jobs the payroll department decided that you do not qualify as "exempt" so they withheld taxes at the single and zero rate. Which means the highest bracket for withholding.

At this job payroll decided that you know whether or not you are truly exempt and took you at your word. Very few people are actually exempt from fed taxes.

Why do you believe you are exempt from fed taxes?

So, if you want them to withhold money and send it off to the feds, re-submit your W-4 and claim either 1 or 0.

Answer 7

I didn't see you mention why are you exempt from paying taxes. Of course you wouldnt get money back because you haven't paid any. If you are not actually exempt from paying taxes, you will owe the IRS. What makes you exempt? If you make over $400 a year, you should pay taxes.
If you were exempt why did you let them take taxes out of your check before? It doesn't make any sense.
It's stupid to let them take the money so you can get a refund because the government is earning interest on the money all year long instead of you.

Answer 8

In Canada, if you make less than $150/week, you don't get any taxes taken off, but how that adds up over the year may or may not screw you. I would phone the IRS directly and ask them if this is normal. Bet you won't hear "yes".

Answer 9

Sounds like you need to submit a corrected W-4

Answer 10

Writing exempt means that you are exempt from paying federal taxes.