Therefore, an underwithheld
taxpayer can lessen or eliminate the penalty for underpayment/underestimation by withholding substantially more at the end of the year.
This will force employers to withhold even more from workers in order to compensate for the fact that they were "underwithheld
" during the affected period.
The withholding agent is secondarily liable for any underwithheld
If you don't, and it later turns out that the employee intentionally underwithheld
taxes, your firm is liable for the difference between what was withheld and what should have been--per paycheck.
(8) For example, underwithheld
taxpayers tend to perceive payments to the tax agency as losses while overwithheld taxpayers tend to perceive refunds from the tax agency as gains.
Taxpayers with relatively simple tax situations may find that their Federal income tax will be underwithheld
by their employer(s) for 1994 resulting in a balance due on their 1994 returns early in 1995.
Reinforcing the blow to consumers will be the recognition that income taxes were underwithheld
for most workers in 1992.
If the fiduciary determines that tax was underwithheld
While this has no effect on the single taxpayer, a married couple may easily be underwithheld
if their combined income is more than $250,000 but neither makes more than $200,000 individually.
As a technical matter, the employer should pay the amount of federal income tax that was underwithheld
. However, there is no guidance to an employer for making the payment and reporting it as an employer's payment.
Source Income of Foreign Persons, to report and pay any underwithheld
tax (including interest and penalties) that the Service determines is due after the filing of the QI's Form 1042 for the calendar year in which the tax was underwithheld