Head of household, not paying federal tax

[schumachermr]

Good afternoon. I just started a new job. I was surprised to see that I do not have to pay federal tax this year. I am a single mother of three, head of household. Can you tell me why federal tax is not coming out of my paychecks.

[VolvoGirl]

You should ask your employer.  You probably should have some withholding taken out so you don't owe next year.  Are they taking out anything like Social Security and Medicare?  Or are they paying you as a 1099 independent contractor?  Then you have to send in estimates to cover the tax yourself.

[JaredS_CPA]

Hello schumachermr,

Thank you for participating in this Ask the Experts event. As to your question, it is most likely due to your income levels. Last year, the IRS has changed the way they withhold by issuing a new W-4 where it is no longer based on exemptions.

Being head of household with 3 dependents, your pay period income would need to reach a certain amount for your employer's payroll system to trigger federal withholding.

Either way, you should verify this with your employer.

[schumachermr]

Thank you  for your response. Should I have my employer set up some kind of withdrawal so that I don’t owe next year?

[Laurie_EA]

Hi 

  Only if you verify with them that you are getting paid on a W2 and you should fill out a new W4 and have additional 

withholdings taking out even a small amount like $25/paycheck. So you  don't owe next year.  

[JaredS_CPA]

It really depends on your income. Being head of household and having three dependents gives you access to a higher standard deduction and child tax credits that will offset the amount of tax you owe. It's worth having a conversation with your employer or you can use TurboTax's calculators to get a better idea before you visit with them.