Underpayment Penalty

hdahal1982 Member Posts: 3 Newcomer


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?

Best Answer

  • rachels
    rachels FreeTaxUSA Agent Posts: 51
    Answer ✓

    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.