Error filling W4 form

Hello, I got a new job at a company last year. I made a mistake in w4 form resulting in no federal and state tax deducted since I joined the company (9 months of 2010.) I just found out when I received W2 forms in the mail last month. How steep is the penalty/interest for neglecting pre-paying income tax? I know it is too late to fix this mistake, but is there any way I can minimize the damage? Thank you in advance. chari

Reply to
chariya
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See line 15 of form 2210 at

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2010, the penalty is 2.383% of the underpayment. The underpaymentis the smaller of: 90% of your total tax minus the amounts withheld onW-2 and other forms, or 110% (or some other percentage depending onyour circumstances) of last year's total tax minus the amountswithheld on W-2 and other forms. The penalty on most state income taxforms is similar to federal. One way to get no tax withheld is to write "EXEMPT" on line 7 of W-4. But the form also says "Under penalties of perjury, I declare that I have examined this certificate and to the best of my knowledge and belief, it is true, correct, and complete" so if line 7 should not have been EXEMPT, you might be in trouble.

Reply to
removeps-groups

Please forgive me for piling on, but for lurkers this is a reminder to be just a little curious about the fate of your money, especially when you change jobs or locations. You get paystubs so you can check to make sure there are no problems. If you see something that doesn't look right, get on it immediately. Mistakes happen every day, and far too many people don't realize it until it's too late to fix it.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

If you were un-employed befor taking the new job you had no income and no withholding in the first tax quarter. Using form 2210 Schedule AI you would owe nothing in the first quarter (hence no penalty), and reducing the 2nd and 3rd quarter requirements also.

If you DID have a job in the first quarter that withheld, use the form

2210 to designate that withholding be applied in the quarteer it was actualy withheld (instead of averaging over all 4 quartetrs.See Instruction for form 2210.

ed

Reply to
ed

Nothing to forgive. You are absolutely right. Unfortunately, My previous and current companies, most financial and benefit statements including pay stubs are electronic. But this is not an excuse, any mindful person would check to see everything is in order once in a while. But I am one of those hard and long hour workers, 50-60 hrs a week is common. Personal matter is usually the last thing in the priority list. Fortunate (ha) for me, I still receive my W2 in the mail.

I may require more time to get all this in order, so I am planning to file an extension. In which case, should I include the estimate penalty amount to my estimate tax?

Reply to
packat

No need. Interest doesn't start accruing on the penalty until they assess it and bill you and you have a chance to pay it.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

The penalty is accruing now, and will continue to accrue until the due date of the return. A payment with extension may not be credited until the due date. If you make an estimated tax payment now, separate from the extension, you may save a few dollars on the penalty.

Reply to
paultry

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