What can I do if my employer changed my withholding, but I didn't tell them to? Now it looks like I will owe the IRS this year!

Will you owe them so much (I think it’s $1000 or more now?) that you’ll be penalized for not withholding enough? Did they also change your state withholding (if your state has income tax)?

If you are penalized, then I would think you’d have a good argument that your employer should pay the penalty, if their changing your withholding was a mistake.

The other side of that argument is that you receive a pay stub with each paycheck which shows your withholding information, so you should have been aware of the change.

Keep in mind, that you got the use of the money that wasn’t withheld. If the only difference is that you owe some instead of paying some, then it did not change the amount you paid in taxes.

Unfortunately, if they merely caused you a cashflow problem at tax time, then you probably can’t do much about it.

When you change deductions, you have to sign a form (an IRS) form. If you believe there has been a mistake, ask your employer to show you ALL of your tax forms that you filled out. If you have never changed the deductions, then they has some explaining to do. (but make sure you get to see the forms – they cannot deny you the opportunity to review the forms.) Make sure, though, you don’t go in with guns blazing – be upfront that you feel there was some kind of mistake, but don’t accuse them of anything, unless you can back it up.

This is why you should always read your entire pay stub – make sure there are ZERO errors. More than likely, you will be liable for the error – you accepted the checks, didn’t mention the error. For the IRS, ignorance is not a good defense.

First, let me say that I am not an expert in this are. Hopefully, one will step up and answer.

It appears, though, that employers cannot just change the number of exemptions you claim. The conditions on which they can do it vary from state to state.

Usually, if they change your withholding because you failed to file a W4, they make it a single person filing 0 exemptions (which is the maximum withheld and should not result in you having to pay taxes in most cases).

The withholding form W4 mostly asks about how many exemptions you are claiming. As tax law changes go into effect, your withholding can go up and down even if your W4 has not changed. So it may be there is no mistake at all.

You can always change your W4 to withhold more (line 6), or if you’re married you can have them withhold at the higher single rate, plus you do not have to claim exemptions from withholding if you don’t want to. You just can’t claim more exemptions than you are entitle to.

yeah, they merely caused me a cash flow problem, it’s only a few hundred dollars so I don’t think there will be a penalty. I’ve worked for this company for three years and never changed my withholding from the original single and zero. I am however guilty of not looking at that on my pay stub every week. And, yep, the state withholding changed along with the fed.

@imhellokitty – have you brought this to their attention? Also – did they explain why this happened?

bak @ cak – o yes I brought it to their attention, of course they can’t explain how it happened. I changed my W4 yesterday.