Why Isn't the Correct Tax Withheld for My Employee?
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.