What legal obligation does an employer have to withold federal and state tax based on an employee W-4 that is on file?

UPDATED: Sep 30, 2022

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What legal obligation does an employer have to withold federal and state tax based on an employee W-4 that is on file?

I am asking this question because I recently received my W-2, as well as my spouse’s. We both submitted a W-4 and on mine I listed and took 4 allowances and my wife took 3. The W-2’s received from our employer shows $0 withheld for both federal and state.

Asked on February 8, 2016 under Employment Labor Law, Minnesota


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

The company should have withheld what you directed them to. The real issue, though, is not what the W-2s say, since they can be amended, revised, or corrected, but what was done:
1) The money was correctly withheld and sent to the IRS (you can also check your paystubs to see if there was withholding or not; and check wth the IRS to see what they received), but the W-2 is wrong: the company can issue a corrected W-2.
2) The money was not withheld and the W-2 is correct: even though your instructions were not followed, no real harm was done: you received the money that should have been withheld and can use it to pay your taxes. You got all the money coming to you, but it just wasn't applied the way you wanted. If you somehow end up paying some fine or penalty for underwithholding, your employer should cover it, because they did not follow your directions.
3) The employer took money out but did NOT send it to the IRS--e.g. there is withholding from your paychecks, but when you finally talk to the IRS, they say nothing was sent on your behalf--this may be be criminal, since in this case it appears someone pocketed your money. Speak to an attorney about taking legal action to get your money back.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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