Tax withholding mystery

February 8, 2016 6:05 PM

Joyous tax season is here. Please help me figure out what is going on with one of my W2s!

The situation: In 2015, I worked for an after school art program from January until mid-September. My boss paid us using personal checks, with no pay stubs included. Several times, I asked her for my pay stub information, and she would have her accountant (not sure how legitimate this accountant was) type up my information. At one point, she gave me this. It shows my tax withholdings from January until July. You can see that both Federal and State are only taken out once.

I received my W-2 recently (several days late, which is typical for this former boss of mine). The total federal withholding for 2015 was $40.00 even, and the state withholding was $14.00 even.

I didn't make a copy of my W-4, though I should have. I'm 99.9% certain that I claimed 1 (myself) on my W-4.

Related: I began another position, a nanny job, at the end of September. I also received a W-2 for this position (on time; thank the stars for a competent boss). I noticed that my gross earnings for both the afterschool position and the nanny position were very similar; both in the $5,000 range. However, my federal withholding for the nanny position is $492, and nothing was withheld for state tax (I think because my income is so low? I live in MN). I also claimed 1 on my W-4 for the nanny position.

So, similar gross income, same W-4 claim, yet drastically different withholding amounts for federal tax. To be honest, I don't trust my former boss. In addition to not supplying pay stubs to her employees, she has done so many other things wrong. I don't know if she made a mistake, or is purposely doing something iffy, or perhaps this W-2 is correct after all. Any insight?

posted by sucre to Work & Money (6 answers total)

I'm guessing that when you started the nanny job, on that W-4 you said that you had more than one job, but when you started the art program job you said that you had only one job (both of these were true). So the nanny job would have withheld at a higher rate (because it assumed you had more than one source of income) and the art program job withheld at a lower rate (because it assumed it was your only source of income).

That said, your art program job/boss does sound fairly sketchy. But you and the IRS are getting the same W-2, at least.
posted by mskyle at 6:12 PM on February 8, 2016

Withholding is generally based on how much you make each pay period and the length of that pay period. I suspect the art program is treating your pay period as "monthly" (as based on the fact that the only month in that spreadsheet when they withheld taxes as also the month in which you were paid the most). If in the nanny job you made most of your money in a more concentrated amount of time (i.e., a smaller number of months), they would have to withhold more. That may explain the difference.

If you're really curious, this pamphlet has the tables and other information that shows how much your employer is supposed to withhold.
posted by phoenixy at 6:31 PM on February 8, 2016

Withholding is done via a table. There is no magic involved and, as noted upthread, it's entirely possible that different amounts could be withheld even if the W-4s you filled out for the two jobs are identical. And further, there is no magic to the W-4s. People routinely "game" their W-4s to adjust their withholding. None of this matters to the IRS. All they care about is that you pay (through withholding and the check you write out to accompany your tax returns) the required taxes based on your total income for the year and that you had withheld at least 90% of your final tax bill. If you had way too little withheld, they may ding for underwithholding but even if they decide to bother you about it the penalty is likely to be ridiculously small.

Now, if your arts program boss actually withheld from your paychecks more than the $40 she indicates on your W-2, then there really is a problem. But that would be her problem, not yours.
posted by DrGail at 7:30 PM on February 8, 2016 [1 favorite]

Best answer: I would check with the Social Security Administration to ensure that the 5 grand you earned from that job has been reported to them. Your income for 2015 should be about $10,000. I don't know how long it takes for your account to be updated with last year's information, but if she was late in getting your W2 out, she may be late with other filing deadlines. They should have instructions on the website to follow if your income is under reported.
posted by soelo at 7:51 AM on February 9, 2016

I received my W-2 recently (several days late, which is typical for this former boss of mine).

Side note because it is unclear from your post. The 1/31 (or this year 2/1 because 1/31 was a Sunday) deadline is the postmark date, not the received date. You may know that and you may mean that it was actually mailed late but being in HR it is definitely my experience that people don't know that distinction.
posted by magnetsphere at 8:19 AM on February 9, 2016

Response by poster: Thanks, all! mskyle, I believe I filled out the W-4 after leaving the previous job, so I only listed the nanny job on the form. Good thought, though!

magnetsphere, thanks for the tip! I did recently read that the mailing deadline is what matters. It's postmarked 2-3-16. So a couple of days late.

The monthly pay period makes sense, I think, maybe? I guess I'm just confused because an art program co-worker, who worked at the art program all of 2015, had almost $800 withheld for federal, as listed on her W-2. I'm almost certain she and I filled out our W-4s the same way. She did work 3.5 months longer than I did, but $40 versus almost $800 just seems way off balance to me.
posted by sucre at 6:37 PM on February 9, 2016