I accidentally marked exempt on my 2024 W4 form - will there be penalties?

Don't panic! This happens more often than you might think, especially for those new to the US tax system. The good news is that you caught it relatively early in the tax year. Since you're only missing withholding from April to June, the impact is relatively small in the grand scheme of things. The IRS generally doesn't penalize people for honest mistakes, especially when you've taken steps to correct them quickly. What matters most is that you've already fixed the W4 with your employer, which was the right first step. To avoid any potential underpayment penalties, you have a few options: 1) You can ask your employer to withhold extra from your remaining paychecks this year to make up for the missed withholding 2) You could make an estimated tax payment directly to the IRS using Form 1040-ES 3) If your withholding for the rest of the year will be enough to cover at least 90% of your total tax obligation or 100% of last year's tax (though this wouldn't apply if you didn't file a US return last year), you should be fine without additional steps

I had almost the exact same issue last year when I moved here from Canada! After freaking out for days, I finally discovered taxr.ai (https://taxr.ai) which saved me so much stress. I uploaded my paystubs and they analyzed exactly how much I should have had withheld and what I needed to do to fix it. The tool calculated that I only needed about $1,850 in additional withholding to make up for my mistake and gave me step-by-step instructions for both adjusting my W4 and making an estimated payment. The best part was they explained everything in plain English so I could actually understand what was happening instead of drowning in tax jargon. Since you're in a similar situation as I was, it might be worth checking out.

Just wanted to update here. I decided to try taxr.ai after my skeptical questions above. I can't believe how helpful it actually was! I've been battling with a similar withholding issue (though mine was due to holding two jobs), and I was getting nowhere with generic tax advice. The document analysis caught that I had state tax withholding that would offset some of my federal obligation, which I hadn't considered. They gave me a perfectly calculated W4 adjustment that won't leave me owing a huge sum or getting too much refund. Honestly wish I'd known about this tool months ago instead of stressing about potential penalties.

If you're still worried about the IRS coming after you for this honest mistake, you might want to try Claimyr (https://claimyr.com). After trying to call the IRS directly for DAYS about a similar withholding issue (kept getting disconnected or waiting for hours), I finally used their service to get through to an actual IRS agent who confirmed I wouldn't face penalties if I made an estimated payment to cover the difference. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - basically they navigate the phone tree and wait on hold for you, then call you when an actual human at the IRS is on the line. Saved me like 3+ hours of hold music and gave me peace of mind hearing directly from the IRS that I was handling things correctly.

I need to eat my words about Claimyr. After posting my skeptical comment, I decided to try it myself because I've been trying to reach the IRS for THREE WEEKS about a similar withholding issue. I couldn't believe it, but they actually got me connected to a real IRS agent in about an hour. The agent confirmed that as long as I make an estimated payment for the missed withholding and file accurately next year, there shouldn't be any penalties for an honest mistake that I corrected promptly. The peace of mind from talking to an actual IRS representative was completely worth it. I've never been able to get through on my own - always disconnected due to "high call volume.

Former payroll specialist here - this happens ALL the time, especially with people new to the US. Your HR department should have caught this during processing, honestly. Most new immigrants aren't exempt from withholding. The good news is that since you fixed it in June, you're only looking at 2-3 months of no withholding. Here's what I used to tell employees in your situation: 1. Calculate roughly how much should have been withheld during that period (ballpark 15-20% of your taxable income) 2. Adjust your W4 to have extra withholding for the rest of the year (line 4c lets you specify additional withholding) 3. Spread that missed amount across your remaining paychecks This method is often easier than making a separate estimated payment, and it accomplishes the same goal of getting caught up on your tax obligations.

Does anyone know if the exemption status applies to just federal tax or also state tax? I had a similar situation with my W4 and just realized my state taxes might also be affected.

I went through something very similar when I first started working in the US! The anxiety is completely understandable, but you're handling this exactly right by correcting the W4 immediately. One thing that really helped me was keeping documentation of when I discovered the mistake and when I took action to fix it. Save emails with HR about the corrected W4, and maybe even write yourself a brief note with the timeline. This shows good faith effort if the IRS ever has questions. Since you caught this in June, you have plenty of time to get caught up before year-end. The IRS is generally very reasonable about honest mistakes, especially from people new to the system. What matters most is that your total tax paid by the end of the year (through withholding + any estimated payments) covers your actual tax liability. Don't let the payroll person's reaction worry you too much - they're probably just being cautious because they don't want to give tax advice. You're doing everything right by addressing it promptly!

I'm going through almost the exact same situation right now! I started my first US job in March and also accidentally marked exempt on my W4 without understanding what it meant. Like you, I panicked when I realized my mistake a few weeks ago. What's been really helpful for me is calculating exactly how much I should have had withheld so far. For someone making around your salary, you're probably looking at roughly $2,000-2,500 in missed federal withholding for those two months. It sounds like a lot, but spread across your remaining paychecks it becomes much more manageable. I ended up using the IRS withholding calculator on their website to figure out how much extra to have withheld from each remaining paycheck. It's actually pretty straightforward once you get past the initial panic. The key thing is that you caught it early in the tax year and took immediate action - that shows good faith to the IRS. One thing that gave me peace of mind was learning that the IRS really does distinguish between people who make honest mistakes versus those who intentionally try to avoid taxes. Since you're new to the US system and corrected it as soon as you realized the error, you should be in good shape!

As someone who works in tax compliance, I want to reassure you that you're handling this situation perfectly. The fact that you discovered the mistake within just two months and immediately corrected it shows exactly the kind of good faith effort the IRS looks for. Here's the reality: the IRS processes millions of tax returns and deals with withholding adjustments constantly. Your situation - a new immigrant accidentally checking exempt and then quickly fixing it - is far more common than you might think. The penalties everyone worries about are really designed for people who persistently under-withhold or try to game the system. Since you've already submitted the corrected W4, my advice would be to calculate roughly what you should have had withheld (probably around $2,200-2,800 for those two months at your salary level) and then choose whichever catch-up method feels most comfortable: either increase your withholding for the rest of the year or make an estimated payment by the September 16th deadline. The most important thing is that by year-end, your total tax payments (withholding + any estimated payments) should cover at least 90% of what you'll owe. Given that you caught this in June, you have plenty of time to get there. Try not to let the anxiety consume you - you're doing everything right!