Shady Employer??

[Slemay925]

Can an employer change my exemptions without my permission to reduce their tax liability??

In calculating my W2/W4 (which is something I do every year just to make sure all numbers calculate properly) I noticed that my W2 sent from my former employer for 2020 had different withholding numbers than I calculated. Meaning they withheld too little taxes. I always claim zero exemptions because my spouse makes a great deal more in income and I want to reduce our year end tax liability as much as possible. Now, I looked up the W2/W4 information on the payroll website and it states my choice as zero exemptions, but the numbers just don't match up. 

I researched to see if a company gets any benefit if they change an employees chosen exemption at any time and It appears that they can reduce their own tax liability this way! Such as setting my exemptions at a higher number for up to 3 quarters and then change it back to zero before the 4th quarter in order to not be caught! Meanwhile, less taxes go to the government and based upon my amount paid, it effects their contribution they must pay because they have to match what I paid! The company benefits while I end up having to pay more taxes at tax time!

Here's an example:                                                         

Exemptions claimed = 0

	Figures from 2020 Company	Figures Personally Calculated
Exemptions Claimed = 0
1. Gross Wages	7,885.66	7,885.66
2. Fed Income Tax Withheld	847.54	1,610.48
3.Social Security Wages	7,885.66	7,885.66
4.Social Security Tax Withheld	488.91	488.93
5.Medicare Wages and Tips	7,885.66	,7885.66
6.Medicare Tax Withheld	114.35	114.35
12a.DD	1,618.56	1,618.56
14.CSDI	78.87	78.87
16.State Wages and Tips	7,885.66	7,885.66
17.CA State Income Tax	206.41	575.68

Please explain this to me??

Thanks!

[JoannaB2]

No,  The employer may not change your Federal Withholdings without your consent unless an order from the IRS to withhold taxes.

The IRS allows you to change the number of your allowances as frequently as you need to, Exemption allowances are entered on Form W4  You can complete Form W-4 to  your employer to withhold the correct federal income tax from your pay. If too little is withheld, you will owe tax when you file ..

[SteamTrain]

And no...changing you exemptions does not reduce their out-of-pocket tax payments....they only have to match the box 4 and box 6 $$ amounts, and those aren't changed t all on the figures you show.

The employer does not match your box 2 amounts.....whether they withhold more for box 2, and pay that for you directly to the IRS, or withhold less in box 2 and end up paying you more with each paycheck during the year....is wash for them as far as their books are concerned.  

What needs to match on your W-2, is the actual yearly total amounts noted for each tax type on your paystubs (if you get paystubs with each paycheck).

[Carl]

The only way I know of that an employer can change your withholding, is on oders from the IRS for federal taxes, orders from the state on your state taxes, and/or orders from a city/town or lower locale (boxes 18-20) on orders from that taxing authority.

[Slemay925]

Alright, thank you all for the advice and info. Much Appreciated!

~S.