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When I enrolled with my new employer's HR system on Dec 1st, I mistakenly filed a W4 claiming to be exempt from federal taxes, which I'm not.

As a result, my first (Dec 15th) paycheck was quite higher than I expected, since no federal taxes were withheld from it. I've already filed a new W4 with the right information, so federal taxes should be properly withheld from my next paychecks going forward.

My question is: should I proactively pay the federal taxes that should have been withheld from my first paycheck? And if so, how should I go about that (in particular, how do I know the amount that should have been withheld, and how do I pay it to the IRS)?

Or should I simply wait to file my regular tax return next year, at which point I would pay the taxes I should have paid on my first paycheck with no extra penalty?

Based in the US, company HQ in CA, but I live & work in WA.

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    How much missed taxes are we talking here? Do you expect to owe taxes or to get a refund other than this, and if you expect to owe, is it a significant amount (over $1000)?
    – Joe
    Dec 20, 2017 at 18:48
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    And is the total amount you've had withheld or otherwise paid, to date, less than, equal to, or more than the total amount of tax liability for last year?
    – Joe
    Dec 20, 2017 at 18:59
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    See my answer; there are a few options. If your income increased this year, you're probably safe from penalty here, in any event. And of course - I am not an accountant, or a tax adviser; if you're particularly worried, see one.
    – Joe
    Dec 20, 2017 at 19:08
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    How did you "accidentally" file exempt? On the standard form W-4 you have to write the word "EXEMPT" in a particular box. It's not just a checkbox you might inadvertently check or forget to check. If you wrote "exempt" but also wrote a number of allowances or an extra dollar amount, the employer is supposed to treat the form as invalid (since it conflicts with itself).
    – stannius
    Dec 20, 2017 at 23:27
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    @stannius it's one of these HR providers that ask you a few questions and file the forms for you. Honestly no idea how their software came to the conclusion I was exempt...
    – user4867444
    Dec 21, 2017 at 3:03

2 Answers 2

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If your total tax due (above what was withheld or otherwise paid through estimated tax payments or similar) for 2017 is less than $1000, you won't owe any penalties.

However, if you owe more than $1000, you have a few other protections. If your total tax withheld or otherwise paid in advance was at least 90% of your current year tax bill, or at least 100% of your last year (2016) tax bill, then you will still not owe a penalty, unless you are a higher income taxpayers (> $150k) in which case it is 110% of last year's tax bill. See Tax Topic 306 and Publication 505.

If you think you may still owe sufficiently to end up with a penalty, you may file a form 1040-ES. Fourth quarter tax payments are due January 16th, so you still have most of a month.

You could also ask your employer to withhold the additional amount on your second paycheck of the month, if you're paid again prior to 1/1/18 and your employer is willing to do so. You would use Form W-4 to make that request, typically; you'd want to again file a new W-4 for 2018 after the additional amount was withheld, so be careful to do so in a timely manner; and verify with your employer that the amount will actually be withheld on a 2017 calendar year paycheck.

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    The employer might not implement a W-4 change in time for the second paycheck. " The IRS says employers are required to implement a new W-4 by the start of the first payroll period ending on or after the 30th day from the date you (the employer) received it." They can implement it faster if they want, of course, but they don't have to (and might not be able to given the timing).
    – stannius
    Dec 20, 2017 at 23:22
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    Correct (hence "willing to do so"). OP has indicated that it is possible, at least they already processed one change this month, so it's certainly a thing to consider (but verify).
    – Joe
    Dec 20, 2017 at 23:24
  • My mistake, I missed those four words when reading.
    – stannius
    Dec 20, 2017 at 23:29
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    The penalty is very, very small and the IRS will compute it for you and send you a bill after you file your taxes. I wouldn't worry about it.
    – David Schwartz
    Dec 21, 2017 at 3:34
  • Penalty is often not a good term for it too. More often than not it just ends up being essentially a "low interest loan" from uncle same, with the penalty being the interest.
    – whatsisname
    Dec 21, 2017 at 19:32
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I would go with filing estimated tax for the 4th quarter. This tax isn't due until Jan. 15th, and a payment is very easy to be made at www.irs.gov. Or, you can file a paper 1040-ES. Your choice. This will cover all your bases, since the IRS considers the tax paid with estimated tax to be the same as withholding tax. If you find that your employer hasn't corrected the mistake by January, you can do the same thing for the 1st quarter 2018, which isn't due until April 15th. For a list of all estimated tax deadlines, type "irs es due dates" into the Google search bar.

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