What is an Employer’s Responsibility to a W-2 Employee?
Employees and Employers are both responsible for making sure federal employment taxes are paid to the IRS. The federal employment tax is comprised of the federal income tax, the Federal Insurance Contributions Act (FICA), and the Federal Unemployment Tax Act. Usually an employer withholds the taxes for an employee, taking the withholdings from an employee’s paychecks. In these cases, the employee is considered a W-2 employee. Employers are responsible for sending the W-2 form to the IRS and to the employee each year, which reports the employee’s annual wages and the amount of taxes withheld from his or her paychecks.
What Happens if no Federal Taxes are Taken out of a W-2 Employee’s Paycheck?
Employers generally must withhold federal income tax from employees’ wages. In order to figure out how much tax to withhold an employer must use an employee’s W-4 form, given to the employee at the beginning of employment. If the employer deducts employment tax from your paycheck and then fails to pay it to the IRS, the employer is personally liable. Employers may face civil or criminal sanctions for failing to pay the employment tax.
If an employee notices that his employer did not deduct his employment tax at all, the employee must take action. An employee may also be held liable if he does not take the proper precautions and abate them personally after seeing the employer did not withhold the employment tax. Employees may not qualify for social security, Medicare, or unemployment benefits if the employment tax is not paid.
What Should a W-2 Employee do if their Employer has not paid Employment Taxes?
Employees who are concerned that their taxes have not been paid should request their W-2 form from their employer. If an employer refuses to give the employee a W-2 form, an employee should file a 4852 form. If the Employer refuses to withhold the employment taxes and the IRS is unable to collect the employment taxes from the employer, the employee still has the responsibility to pay the federal income tax and the Federal Insurance Contributions tax.