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W-4 Triggers " you don't earn enough money to pay your taxes" from Square Payroll

I have tiny side-job. The business uses Square Payroll. I keep adapting a W-4 to try to meet the requirements (I have not had a W-4 since the days of 1 or 0s). It keeps rejecting my W-4, saying I don't earn enough money to meet my tax obligations. (We pay estimated taxes and have no other W-2 income - I *know* I don't earn enough to pay my taxes.)

 

Can I just fill it out to withhold NO tax and then pay the tax due in April?  The amount I will earn is less than $2,000.  Would there be any penalties because of this?  

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5 Replies
marctu
Employee Tax Expert

W-4 Triggers " you don't earn enough money to pay your taxes" from Square Payroll

With you making only about $2,000 from this job, I have to assume the rejection of the non-acceptance of the W-4 is due to the amount you make, which is well below the standard deduction of $15,000 for single and $30,000 for married filing jointly.   

 

I would just build the $2,000 of income into the estimated taxes you already pay, though you may want to ask your employer what the defaults in the Square system are.  They may have a better idea as to why. 

 

Thank you for question @Mingo08 

 

All the best,

 

Marc T.

TurboTax Live Tax Expert

28 Years of Experience Helping Clients

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DRich5
Employee Tax Expert

W-4 Triggers " you don't earn enough money to pay your taxes" from Square Payroll

If the side job is just $2,000 a year and the W-4 is showing that you are not making enough to have deductions taken out, you can add to your quarterly estimated taxes based on your tax rate.  For example if your tax rate is 10% year, you would want to pay in an estimated $200  a year over the 4 quarters.  

 

W-4 Triggers " you don't earn enough money to pay your taxes" from Square Payroll

Thanks so much!

 

The employer really doesn't know what's going on, just that my W-4 "isn't right." Square just refuses to cut a check, saying they cannot withhold the amount they need to based upon the W-4 numbers.  I've tried twice, amending the numbers each time, and it has balked at a paycheck.  The IRS calculator I have used to configure a W-4 gave me the answer of "Your tax liability is greater than your income" - essentially no help.  

 

All of the W-4 information I can reference suggests that the system is based on W-2 earnings being the "source" of funds for paying taxes (estimated or otherwise).  I usually have to click the boxes in TurboTax for "this is uncommon and doesn't apply to many people" so the territory isn't new. 

 

I should get paid again in a few weeks. We will see if how I filled it out this time works and if they will cut me check.  I completed it with numbers that are our "normal" income levels, without those things I know we will do this year that create our need for estimated tax payments.  

 

As long as we have "safe harbored" our taxes, we should be okay, I think. 

W-4 Triggers " you don't earn enough money to pay your taxes" from Square Payroll

Thanks!  That may be the best option.  

 

I think the 1 or 0 deductions was easier than this for W-4s! 

marctu
Employee Tax Expert

W-4 Triggers " you don't earn enough money to pay your taxes" from Square Payroll

I am sorry to hear about the hassle factor here.  I think you are on the right path about just adding it to estimated payments @Mingo08 

 

All the best,

 

Marc T.

TurboTax Live Tax Expert

28 Years of Experience Helping Clients

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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