Why Isn't the Correct Tax Withheld for My Employee?
Why isn't the expected tax being withheld from my employee's paycheck in 7shifts Payroll?
Tax withholding amounts in 7shifts Payroll are determined by several factors tied to each employee's W-4 and earnings. This is sometimes described as missing tax withholding or an employee not having enough tax taken out of their paycheck.
Employee tax withholding is based on the following:
- W-4 elections and filing status: the amount withheld depends on the information the employee provided on their W-4, including dependents, exemptions, and any additional withholding amounts.
- Minimum income thresholds: federal income tax withholding is only triggered once an employee's earnings meet the minimum threshold for that tax.
- Applicable tax rates: withholding is based on federal, state, and local tax rates, along with fixed percentages for Social Security (6.2%) and Medicare (1.45%).
Why This Happens
If withholding looks lower than expected, it's usually because the employee's W-4 elections reduce the calculated amount. Common reasons include a high number of dependents, a claimed exemption, or earnings that fall below the minimum threshold for a given tax type.
What To Do
Important: Employees should consult an accounting professional to clarify withholding expectations. Employees can adjust their withholding by completing Section 4(c) on their W-4.
To review withholding elections across your whole team at once, download the Employee Withholdings & Exemptions report from Payroll > Reports. The report shows each employee's W-4 filing status, dependents, exemptions, and additional withholding inputs on file.
To verify that the expected taxes match what's being withheld in 7shifts Payroll, enter the employee's W-4 details and earnings into a third-party paycheck calculator and compare the results.