Why was no federal income tax withheld from my paycheck? Why would my employer do that?

For many, the expectation that some taxes are going to come out of your pay is a given. But if you’re taking a close look at your paystub and don’t see that Uncle Sam is getting his share, you may wonder, “Why was no federal income tax withheld from my paycheck?”

The missing withholding could be due to a number of reasons, but it’s worth investigating the actual reason why. As you may know paycheck withholding is linked to covering any tax liability you may have with the Internal Revenue Service (IRS) each year—so, clearing up any tax-related missteps is in your best interest. 

While the best way to find out why there was no withholding tax deducted from your paycheck is to ask your employer, we can also help you give you a few clues.

4 reasons why you may have had no federal taxes withheld

Here are some possible reasons why your employer didn’t withhold federal taxes withheld (or even state taxes):

1. If you’re considered an independent contractor, there generally would be no federal tax withheld from your pay. Rather than completing a Form W-4 to show your withholding preferences, you likely completed a Form W-9 to show your social security or other tax ID number to your employer or client. If this is the case:
2. You probably received an IRS Form 1099-NEC instead of a W-2 to report income received. No Social Security or Medicare tax would have been withheld either.
3. You’ll need to file a Schedule C to report the income and any expenses from a business you operated, profession you practiced, or gig work you performed.
4. You’ll also need to file a Schedule SE to report and pay your self-employment tax, which consists of Social Security and Medicare taxes. Most self-employed people pay estimated tax quarterly to keep up on their tax liability.  

Want to avoid tax-time surprises? Get ahead of your independent contractor tax obligations and check out our Filing Guide to Gig Worker Taxes.

2. You might have claimed to be exempt from federal tax withholding on your IRS Form W-4. You must meet certain requirements to be exempt* from withholding and have no federal income tax withheld from your paychecks. You should check with your HR department to make sure you have the correct amount withheld.

3. Your employer might have withheld taxes but gave you an incorrect W-2. If this is true, your employer must issue you a corrected W-2.

4. Your employer might have just made a mistake. If your employer didn’t have federal tax withheld, contact them to have the correct amount withheld for the future. When you file your tax return, you’ll owe the amounts your employer should have withheld during the year as unpaid taxes. You may need a corrected Form W-2 reflecting additional FICA earnings.

*Note: Being exempt from withholding is not the same thing as withholding allowances (this went away in 2020). Learn more about what it means to be “exempt from federal withholding”.

Getting federal income tax withheld the right way

It’s no small thing to get your federal tax withholdings right. But it can also be tough to just keep up with what’s changed since the last time you’ve filled out a Form W-4. Like the fact that allowances haven’t been on the form for several years. Who knew?

Luckily, we’re here to help make getting your withholding right a lot easier. You can also use our helpful tax withholding estimator calculator to create a completed W-4 you can print out, sign, and give to your employer.

And, if you’re wondering what happened to the W-4 form and withholding allowances, get the scoop from our post: Understanding W-4 Withholding Tax Exemptions, Allowances, and Deductions.

No federal income tax withheld? Get help from Block

Hopefully we helped to explain why no federal income tax was withheld from your paycheck. But, it might be in your best interest to get tax help if there was no state or federal income tax withheld from your paycheck or if your employer did not withhold federal taxes, especially if it will affect your taxes owed or your ability to get a refund.

If you had no federal tax withheld from your paycheck and need help navigating your taxes, you can always get help from H&R Block tax pro. Plus, whether you choose to file with a tax pro or file with H&R Block Online, you can rest assured that we’ll get you the biggest refund possible.