My employer stopped withholding federal taxes from paychecks due to Workday system issues

15 This is definitely a concerning situation, but try not to panic too much. Let me break this down for you: When federal taxes aren't withheld properly, you'll likely owe the full amount of those taxes when you file your return. The main concern is potentially facing an underpayment penalty if you end up owing more than $1,000 when you file. You have a few options to mitigate this situation now: 1. Increase withholding on your end-of-month paychecks to compensate for the mid-month shortage 2. Make quarterly estimated tax payments directly to the IRS to cover the shortfall 3. Check if you qualify for any safe harbor provisions (if you pay at least 90% of current year tax or 100% of last year's tax through withholding) As for placing responsibility on your employer or Workday - while your employer is technically responsible for proper withholding, the ultimate tax liability always falls on the taxpayer. You might request that your employer cover any penalties that result from their system error, but they're not legally obligated to do so. I'd recommend documenting everything related to this issue and consulting with a tax professional about your specific situation.

18 Hey, I went through something similar last year with my company's transition to Workday. After spinning my wheels trying to get answers from HR for weeks, I finally used taxr.ai (https://taxr.ai) to analyze my pay stubs and tax situation. It helped me understand exactly how much federal tax I was missing and what I needed to do to fix it. The tool basically looked at my pay stubs, calculated the proper withholding that should have happened, and showed me exactly how much I needed to adjust my W-4 on my remaining paychecks to make up the difference. It also gave me a breakdown of potential penalties I might face and how to minimize them. Honestly way more helpful than anything my company provided.

12 I just wanted to follow up about my experience with taxr.ai after seeing it mentioned here. I was skeptical at first (who isn't with tax stuff online?), but I gave it a try last weekend. Super glad I did! It identified that my employer wasn't just messing up federal withholding but also incorrectly calculating my state tax withholding across two states. The system walked me through exactly how to fill out a new W-4 and gave me specific numbers to put in the "extra withholding" field to catch up before year-end. I took this to HR yesterday, and for the first time, they actually understood the issue clearly! Apparently several other employees had the same problem but couldn't explain it well enough for HR to fix it. Now they're addressing it company-wide.

23 Have you tried getting through to the IRS directly to ask about this? I was in a similar situation (not with Workday, but with missing withholding) and spent WEEKS trying to get through to someone at the IRS who could give me straight answers about penalties. Finally tried Claimyr (https://claimyr.com) which got me through to an IRS rep in about 20 minutes. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c I was totally prepared to wait on hold for hours, but their system held my place in line and called me when an agent was ready. The IRS agent I spoke with gave me the exact penalty calculation formula and confirmed I could request a first-time penalty abatement since I had a good filing history. Also found out that my employer could potentially face separate penalties for not properly withholding, which was interesting info to bring back to my HR department.

8 I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway out of desperation since I kept getting disconnected from the IRS phone line after waiting 45+ minutes. Using the service, I got connected to an actual IRS representative in about 35 minutes without having to actively wait on the phone. The agent confirmed that I could submit Form 843 (Claim for Refund and Request for Abatement) to request relief from penalties due to my employer's payroll system failure. She also explained exactly what documentation I needed from my employer to support the claim. This was information I couldn't find anywhere online and would have had no way of knowing without speaking to someone directly. Honestly worth every penny just for the time saved and stress reduction.

3 Has anyone brought this up with your state labor department? This seems like it could actually be a violation of labor laws in some states. When my previous employer messed up payroll tax withholding, our state labor board got involved and forced them to provide affected employees with free tax preparation services that year and cover any resulting penalties.

10 Hey, might not be directly solving your problem, but I think the IRS has this first-time penalty abatement program you could look into if you do end up owing penalties. My friend used it last year when she had a similar withholding issue (different situation, but same outcome of owing a bunch at tax time). She got all the penalties waived because she had a clean tax history for the previous 3 years.

Document everything! I went through a similar Workday implementation disaster at my federal agency job. Here's what I wish I'd done from day one: 1. Save every paystub showing the missing federal withholding 2. Get written confirmation from HR/payroll about the system issue (email works) 3. Document every conversation about this problem with dates and names The key thing people aren't mentioning is that you should immediately start making quarterly estimated tax payments to avoid the underpayment penalty. Even if your employer eventually fixes this, you're already 7 months behind. Use Form 1040ES and make payments for Q3 and Q4 at minimum. Also, push your HR department hard on this. Seven months is way too long for a "system issue" - at this point they should be manually calculating and withholding the correct amounts even if Workday can't do it automatically. I'd escalate this to your union rep if you have one, or consider filing a complaint with your state's department of labor. The silver lining is that employer payroll failures like this are exactly the kind of situation where the IRS will often grant penalty relief, especially with good documentation showing it wasn't your fault.

This is a frustrating situation that unfortunately more government agencies are experiencing with Workday implementations. As someone who works in tax compliance, I'd recommend taking immediate action on multiple fronts: First, calculate your federal tax shortfall using your most recent paystub. Take your gross pay, subtract pre-tax deductions, then multiply by your effective tax rate (you can estimate this from last year's return). This will give you a rough idea of what should have been withheld. Second, file Form 4868 when tax season comes if you need more time to gather funds - this gives you an extension to file and can help avoid failure-to-file penalties even if you still owe. Third, consider approaching this collectively with other affected employees. When multiple people are impacted by the same system failure, agencies are more likely to find solutions quickly. You might also want to contact your state's ombudsman office if you're a state employee - they often have more leverage with agencies than individual complaints. The good news is that the IRS has several penalty relief programs specifically for situations like this where the taxpayer made good faith efforts but was prevented from proper compliance due to circumstances beyond their control. Just make sure you're documenting everything and taking proactive steps now rather than waiting until tax time.