W2 issues

[937]

the HR of my job made a mistake when transitioning to a new payroll system last year and thus failed to withhold my federal tax for several paychecks. So my 2023 W2 has less tax withholding compared with my previous years. This causes tax unemployment and possibly penalty. I raised the problem with my H.R. and they shirked their responsibility. What do you suggest to fix this issue?

[BillM223]

You mean fix this issue for 2024? It's too late to fix it for 2023.

For 2024, you might find it instructive to use the IRS "Tax Withholding Estimator". Over the last several years, the IRS has manipulated the tax withholding tables, meaning that some taxpayers are off on their withholding.

This should allow you to get an idea of what your annual withholding should be, and you can work with HR on your W-4 to make it come out closer to what you want.

Also note that if things get off the rails withholding-wise, you came make estimated tax payments by going to "Make a Payment" at the IRS website. This is helpful if you are self-employed or have a sudden burst of income.

[937]

Thank you for responding. For 2023, when I file my taxes, how or where can I explain it to IRS that it’s not my fault so that I don’t get a penalty afterwards? Also will this leave a negative record that will influence my future tax returns?

Thank you again!

[ThomasM125]

There isn't any way to influence the IRS to not issue a penalty for late payment of tax beforehand in this situation. If you receive a penalty, you can protest it and explain what happened and the IRS may take that into consideration. It is possible in the future that you may receive a penalty for something else and the penalty you received here may influence the IRS's decision to not rescind a future penalty.

If this is the first time you received a tax penalty during the past three years, you can request a penalty relief due to 1st time abatement of tax per the information detailed in this IRS article:  1st time offense abatement of tax penalty

[937]

This is helpful. Thank you.