The Small Business Tax Help Blog

Posts Tagged ‘federal income tax withholding penalty’

Question: Why did my federal withholding decrease?

I’m doing my taxes this year, and when I’m done I realize I owe federal $2,500. Last year I owed only about $500. In reviewing both my wife’s and my W-2’s, I found that the federal withholding was significantly less for both of us than it was last year. Anybody know why that would be? Both my wife and I has similar incomes as the year before, well under $250,000. Does that mean I now have to calculate a penalty?
Same salary, didn’t change the w-4’s. Wierd, huh?

Answer: Because of the stimulus, last year beginning in April less taxes were being taken out of everybodys paychecks. Should have only added up to $400 per person, but if you had multiple jobs it could have been happening to every paycheck. That was a big fault in the program. Also, did you do anything with your W4’s? And yes, you’ll have to pay an underpayment of tax penalty. Won’t be too much though (definitely under $100).

And yes, you will pay a penalty. The second answerer doesn’t seem to think so but you will, because you didn’t pay enough taxes through out the year. Thats how it works. It goes on the second page of your form 1040.

Related Information

1.1.1. Income Tax Rate. The general statutory corporate income tax rate for entities incorporated in Argentina including branches or permanent establishments of foreign companies is 35%.

Former IRS Agent Acquitted of Tax Crimes