There can be several reasons why no federal income tax was withheld from an employees payroll.
The employer may have made a mistake when entering the W-4 withholding information into their payroll system. Or the employee may have indicated they are exempt from federal tax withholding (in error) when they completed the Form W-4. You can request a copy of the W-4 from your employer to see if either of either of these scenarious occurred.
In some cases, however, an employee may actually be exempt from withholding. If an employee qualifies, he or she can also use Form W-4 to tell you not to deduct any federal income tax from his or her wages. To qualify for this exempt status, the employee must have had no tax liability for the previous year and must expect to have no tax liability for the current year.
