Underpayment Penalty

hdahal1982

Hello,

My client is regular W-2 Employee. After filing all the w2 into the taxes using my software, they owe tax penalty. Since they are W-2 Employee, is this normal to this happen to w2 employee? Since estimated tax is done by employer, are they not suppose to take enough withholding to not have this situation?

rachels

Hi hdahal1982,

That is not unusual. Employers withhold federal taxes based on the W-4 an employee files with the company. If an employee claims too many exemptions on their W-4, it can result in under-withholding on their wages. You may want to encourage your client to update their W-4 with their employer to avoid penalties in the future.