When you work as an employee, your employer is responsible for withholding the proper amount of taxes from each paycheck and sending that money to the IRS. If you find that your boss is not withholding federal income taxes, it is your responsibility to contact your employer for an explanation. If your employer does not withhold taxes, you must still make those payments to the IRS.
Check Your Pay Stub
You should always check your pay stub carefully, whether or not you suspect a problem. Every time you get paid, take a few minutes to look at the accompanying pay stub. Find the amount of your gross pay, as well as the amount of federal, state and local income taxes withheld.
This number should be fairly consistent if you earn roughly the same amount each pay period. If you notice a dramatic increase in your take-home pay, that could be a sign that your tax withholding is too low.
Read More: How Much in Federal Taxes is Taken Out of Paychecks?
Contact Your Employer
If you do find a problem with your tax withholding, you should contact your employer right away. If you spot the problem quickly, the employer can adjust the amount of your withholding to make up for any missed payments. But if you let it go too long, it could be difficult to make up that money, and you could end up owing a lot of money to the government.
Independent Contractor Tax Responsibilities
If the company you work for classifies your job as that of an independent contractor, it is not required to withhold any taxes from the payments it gives you. As an independent contractor, you are responsible for paying the taxes you owe, generally by making estimated quarterly payments to the Internal Revenue Service and your state revenue department.
If you are classified as an independent contractor, it is a good idea to consult with a tax planner or CPA to plan your tax strategy.
Estimated Payments or Quarterlies
You are responsible for paying the federal income taxes you owe, even if your employer fails to withhold those taxes from your paycheck. If you find that your employer is not withholding federal taxes, consider making quarterly estimated tax payments based on what you expect to owe. You can use a commercial tax preparation software package to make those payments to the IRS. If you wait until tax time to pay the taxes you owe, you will face penalties for underpayment.
If you use a software program such as Turbo Tax, you'll have access to questions and answers on how to make estimated payments. You can make an account on the IRS website to pay your quarterly estimated tax payments. The site also offers calculators to help figure out how much you owe each quarter.
Remember the quarterly payment schedule is April, June, September, and then January for end of year income. The IRS form 1040-ES is extremely helpful with information on paying estimated taxes.
Based in Pennsylvania, Bonnie Conrad has been working as a professional freelance writer since 2003. Her work can be seen on Credit Factor, Constant Content and a number of other websites. Conrad also works full-time as a computer technician and loves to write about a number of technician topics. She studied computer technology and business administration at Harrisburg Area Community College.