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I'm a bookkeeper at a small firm and I just noticed something weird while entering payroll data. Our operations manager is having absolutely ZERO federal income tax withheld from his paychecks despite making around $75K annually. I was shocked when I saw this so I reached out to our payroll service provider about it. They sent me back a copy of his W-4 form and pointed to the "Exemption from withholding" section on the second page. From office gossip and things I've overheard, I'm pretty sure this guy hasn't filed his taxes in several years. I think he's using the loophole of "I didn't pay taxes last year" to claim he "had no federal income tax liability in 2024" on his W-4. And since he probably doesn't plan to file in 2025 either, he's using the same excuse looking ahead. I suspect he's doing this not only to avoid paying taxes but also to stay off the IRS's radar completely. While I'm annoyed that he's apparently getting away without paying what he legally owes, that's ultimately between him and the IRS. My real concern is about potential liability for our company. Could we get in trouble for this? Does the fact that we use a third-party payroll company offer any protection? Is "We just followed his instructions on the W-4" a valid defense if this ever comes up in an audit or investigation?
I can't seem to track down a W-2 from one of my employers for the 2023 tax year. The situation is frustrating because they went completely out of business sometime last year. All I have is their LLC name, the old business address (which is now empty), and their tax ID number. No phone contacts or email addresses for anyone who worked there. I tried calling the IRS for help, but when I follow all the automated prompts, I just get a recorded message telling me to "contact your employer" and if that doesn't work, to "call back after February for assistance." This recording seems outdated since it's already April, but I can't get past it to speak with anyone. Does anyone know another way to reach the IRS about this? I tried going through their online portal but don't see any option specifically for missing W-2 help - just transcript requests that need the information I'm trying to obtain in the first place. I looked at Form 4506-T which has an option for W-2 information, but it states that 2023 information (filed by employers in 2024) won't be available until 2025. I need this for my current tax filing! Any advice would be really appreciated. I'm stuck and running out of time before the deadline!
Has anyone tried just using the numbers from their last paystub and filling out the substitute W-2 form (Form 4852)? I'm in this exact situation - my employer shut down their whole operation in November and literally no one is responding to emails. My tax guy says I can use my last paystub to fill in all the numbers, but I'm worried about accuracy since some of my deductions were weird toward the end (they started taking out different health insurance amounts when they were having financial problems).
I did this last year when my W-2 never showed up. Used my December paystub and filled out Form 4852. It worked fine but I had to file a paper return which took FOREVER to process. Got my refund like 5 months later. Also make sure your YTD (year to date) numbers are actually for the full year. My paystub reset the YTD fields in July for some weird reason so I had to add two numbers together. Check if you have an earlier paystub to compare.
For anyone dealing with this issue in the future - the IRS usually gets W-2 information from employers by late March even if the business closed. The transcript might not be immediately available online, but an IRS rep can often see it in their system before you can. Also worth knowing that if you absolutely can't get the info and must estimate, make your best guess using your final paystub and file on time. If you find out later that your numbers were wrong, you can always file an amended return. Better to file on time with estimates than miss the deadline completely!
Hey everyone. I really appreciate you reading this. I'm a self-employed illustrator and I'm honestly terrible at managing the business side of things. I've been on my own most of my life so I don't have anyone to turn to for advice on this stuff. All my income comes through PayPal, which I know reports to the IRS. I have my 1099 for 2024 (plus the two years before that I still need to deal with). I desperately need to file my taxes by tomorrow to get my stimulus payment since the IRS doesn't have my payment information on file. The problem is I have absolutely zero receipts or expense records. I have a rough idea of what I might have spent on art supplies and business expenses, but I don't know exactly what qualifies as deductible. I tried using TurboTax but felt weird putting in dollar amounts I can't verify. Even being as honest as possible, the amount I owed was financially devastating. Though that's probably because I don't know what I'm doing. I called H&R Block hoping they'd help identify deductions, but they asked for the same info TurboTax wanted, so I don't feel like I'm getting actual help. Is there someone I can go to for real advice and support with this? Or am I stuck doing my best with TurboTax, guessing at my expenses, and dealing with a massive tax bill just so I can get the stimulus money in the short term? (I've started a Google Doc and physical folder to track all my expenses going forward, starting yesterday.) Thanks for any help. Sorry if this is too vague - happy to provide more info if needed.
Fellow illustrator here! One thing that saved me when I had a similar situation was going through my email for digital receipts. Check your inbox for: - Adobe subscription payments - Art supply store order confirmations - Computer/tablet/hardware purchases - Online course payments - Website hosting fees Also check your social media DMs if you arrange client work there. My Instagram DMs had tons of evidence of client negotiations that helped prove income sources. And don't forget apps like Venmo or Cash App if you've used those!
Thank you so much for these specific suggestions! I never thought to check my email archives but I just did a quick search and found at least 15 receipts for art supplies I'd completely forgotten about. Found records of my Procreate purchase, Clip Studio subscription, and even some drawing tablet accessories. Do you think PayPal's reports will show both my income AND my business expenses if I purchased them through PayPal? Or do I need to sort that out separately?
PayPal reports will show all your transactions, but they won't distinguish between personal and business expenses automatically. You'll need to go through and identify which purchases were for your illustration work. Your PayPal 1099 only reports your income received through PayPal, not your expenses. I'd recommend downloading your PayPal transaction history for the full year and sorting it in a spreadsheet. Look for payments to art supply stores, software companies, and other business-related vendors. Flag those as potential deductions, then verify with any email receipts you can find to confirm the purpose of each purchase.
Don't ignore your taxes!! I did that for two years as a freelancer and ended up owing over $15,000 with penalties and interest. The IRS eventually garnished my bank account and it was a NIGHTMARE to fix. Even filing with estimates is way better than not filing at all. And definitely set up quarterly estimated tax payments going forward - that was my big mistake, thinking I could just pay it all at the end of the year.
So this is my first time as a US tax resident and I'm super anxious to get my taxes done ASAP. I moved here from Canada last March for a job opportunity (loving it so far!) and I want to be really on top of things with my filing. My company already sent me an email saying W-2s are going to be ready by the end of January, and I've been keeping all my receipts organized since I arrived. I'm pretty sure I'm going to get a refund based on my withholding, and honestly I could really use that money sooner rather than later (wedding planning is $$$ lol). What's the earliest date I can actually file my US taxes? I know the deadline is April 15th, but when does the IRS start accepting returns? I've heard different things from coworkers - one said January 15th, another said end of January, and someone else mentioned February. Does anyone know the actual earliest filing date for 2025?
Just want to add - don't rush to file the moment the IRS opens if you're expecting forms other than your W-2! I made that mistake last year and had to file an amended return because my 1099-INT from my bank came late. Also, if you had any foreign accounts or investments before moving to the US, you might need to file a FBAR form (Report of Foreign Bank and Financial Accounts) separately from your tax return if the total value was over $10,000 at any point during the year. That deadline is actually different from the regular tax deadline.
Oh wait, I do still have a savings account back in Canada with about $15,000 CAD in it. I had no idea I needed to report that! Is that going to cause problems? And does that mean I can't file early?
You definitely need to file an FBAR for that account since it exceeds $10,000. It's not part of your tax return though - it's filed separately through FinCEN (Financial Crimes Enforcement Network). Don't panic! It's just an information reporting requirement, not a tax. You can still file your regular tax return early, and the FBAR is due April 15th with an automatic extension to October 15th. Make sure you also report any interest earned on that Canadian account on your US tax return (Schedule B). The fact that you're asking about this now is good - it's much better to handle it correctly from the start rather than having to fix it later!
Has anyone used the IRS Free File program as a first-time resident? I heard there are income limits but I'm not sure if residency status affects eligibility?
I used IRS Free File last year as a new resident (moved from Australia). As long as you meet the income requirements (under $73,000 for most programs), your residency status doesn't affect eligibility. They'll ask questions about when you became a resident, but the free software handles it just fine!
I just got hired for a temporary position that's only going to last for the next two weeks. This is literally the only job I'll have this year, and I'm supposed to make around $1,900 total. I'm currently in college and my parents will be claiming me as a dependent on their taxes this year. I'm filling out my W-4 form and trying to figure out if I should claim zero allowances or what? I'm not really sure what the best approach is here since it's such a short-term thing. Does being claimed as a dependent by my parents affect how much gets withheld from my paycheck? What other things should I be thinking about with this situation? I've never had to deal with this before and want to make sure I don't mess anything up for next year's filing.
When I was in ur situation I just put "EXEMPT" on my w4 (there should be a place for this on the form). That way they don't take any federal taxes out at all. Just be aware they'll still take out Social Security and Medicare taxes no matter what (those are different
Unrelated to the withholding question, but make sure your parents understand how claiming you impacts their taxes vs you filing independently. Sometimes parents claim kids without actually running the numbers both ways. In some situations, it might be better overall if they don't claim you, but you'd need to talk with them about it.
Hugh Intensity
As someone who's worked in payroll compliance for 15 years, I'd recommend documenting everything immediately. Send an email to both your manager and the payroll company expressing your concerns about the W-4 exemption claim at that salary level. Request written clarification on company policy regarding potentially invalid W-4s. This creates a paper trail showing you raised concerns appropriately. If the operations manager pushes back, suggest having your tax professional or payroll provider give a second opinion on whether the exemption claim appears valid. The IRS specifically states that someone making $75K almost certainly has tax liability unless they have massive deductions.
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Vince Eh
AuthorThanks for this advice. What specifically should I include in this documentation? Should I mention my suspicion that he hasn't filed taxes, or just stick to the facts about the W-4 exemption not seeming appropriate for someone at his income level?
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Hugh Intensity
Stick strictly to the facts and avoid speculation about his tax filing history or intentions. Your documentation should focus only on what you directly observe: that an employee making approximately $75,000 has claimed complete exemption from federal tax withholding, which appears unusual and potentially concerning from a compliance perspective. Phrase your concerns as questions rather than accusations. For example: "I noticed our operations manager has claimed exemption from all federal withholding despite having a salary of $75K. Given this income level, I want to confirm this is being handled correctly and that we're following proper procedures for verifying unusual W-4 claims.
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Effie Alexander
Has anyone looked at the "lock-in letter" process? My company went through this last year with an employee who kept claiming excessive exemptions. Eventually the IRS sent us a lock-in letter that specified exactly what withholding rate to use regardless of what the employee put on their W-4. Might be worth checking if your company has already received something like this for this employee. The IRS sends these when they notice patterns of underwithholding. They basically override whatever is on the W-4.
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Melissa Lin
That's a good point! The lock-in letter process shows the IRS definitely monitors these situations. My brother works in HR and said they received one for an employee who had claimed exempt for 3 years while making over 100k. The IRS specified exactly what withholding to use and they weren't allowed to change it without IRS approval.
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