I told employer to exempt my federal and state tax withholding on paycheck and they did. I just realize Im not qualified for exemption. How can I pay back exempted tax?

[MichaelMc · Accepted solution]

The most important thing to do right now would be to file a new Form W-4 and your state withholding certificate with your employer, so that the correct income tax amount is withheld from the remaining paychecks this year. There is no direct mechanism for "paying back" the withholding that has been missed from your earlier paychecks.

If you are concerned that you may be under-withheld for the year, there are two possibilities. You can make an estimated tax payment by April 15. Or, you can instruct your employer to withhold a fixed dollar amount from each remaining paycheck this year, in addition to your regular withholding. This will bring your withholding to where it should be by the end of the year.