OT - IRS 2802c letter

[BlueWorldOrder74]

Mods - please allow this for just an hour or so,‘I know there are someway pros on this board that can give some quick info....

I have a manager who works under me who received a 2802c letter, where the IRS is telling him to use a calculator or estimator to figure out either tax amounts he should have withheld or number of dependents he should claim - something like this. He currently claims 0 with $0 additional witheld. Seems this should allow the IRS to withhold max amount?

Why would he get this? What should he do? It also notes that December is too late to make adjustments for this year? Any info?

 

[KYCAT78]

Mods - please allow this for just an hour or so,‘I know there are someway pros on this board that can give some quick info....

I have a manager who works under me who received a 2802c letter, where the IRS is telling him to use a calculator or estimator to figure out either tax amounts he should have withheld or number of dependents he should claim - something like this. He currently claims 0 with $0 additional witheld. Seems this should allow the IRS to withhold max amount?

Why would he get this? What should he do? It also notes that December is too late to make adjustments for this year? Any info?

Does he owe back taxes from a prior year?

 

[HagginHall1999]

I'm no tax expert but...

https://www.irs.gov/individuals/understanding-your-2802c-letter

 

[BlueWorldOrder74]

Does he owe back taxes from a prior year?

he said no, but not sure.

 

[BlueWorldOrder74]

Does he owe back taxes from a prior year?

apparently he didn’t file for last year? Not sure why!

 

[HagginHall1999]

he said no, but not sure.

What is confusing about link I sent is it almost makes it sound like he was picked out...

Can the company records be audited and they look at individual witholding selections?

This is what I do know. I work in a business and have for years that is salary and commission. When I was younger and on a monthly commission it was common place at my former employer to go in a un-check box for witholding federal tax on a particular commission check...then you'd go back a week later to normal. Many would do this when they had a killer months so that the ridiculous tax rate wasn't hit on a commission check (it is much higher than regular salary check).

I knew a guy who did the above too much and owed money at end of year. Next year he didnt have the option to do it and they basically put a lien on his checks to get money back.

That might be confusing, but I'm not sure how else to explain it.

 

[kybassfan]

My guess is that they think he is earning enough to have to pay but nothing or too little is being withheld. Maybe from a second income or some other amount paid to him?

Stolen identities are all too common. Many people are far too trusting. That’s also a possibility.

Bottom line is could be many things. Best to contact them and work out the details.

 

[KYCAT78]

They are sending letter more than likely to get him to increase his withholding so he pays more than he owes for the tax year so his refund can be applied to past year taxes and penalties. He can either change his withholding or the IRS will instruct his Employer to do it.

 

[KYCAT78]

My guess is that they think he is earning enough to have to pay but nothing or too little is being withheld. Maybe from a second income or some other amount paid to him?

Stolen identities are all too common. Many people are far too trusting. That’s also a possibility.

Bottom line is could be many things. Best to contact them and work out the details.

I agree, hard to give a good answer without all of the facts. He can contact the IRS but he can forget about any chance that his withholding will be held at its current level.

 

[justanotherguy505]

Mods - please allow this for just an hour or so,‘I know there are someway pros on this board that can give some quick info....

I have a manager who works under me who received a 2802c letter, where the IRS is telling him to use a calculator or estimator to figure out either tax amounts he should have withheld or number of dependents he should claim - something like this. He currently claims 0 with $0 additional witheld. Seems this should allow the IRS to withhold max amount?

Why would he get this? What should he do? It also notes that December is too late to make adjustments for this year? Any info?

Apparently, he will have to pay additional federal taxes; when the taxpayer is expected to owe additional taxes, he/she is required to make estimated payments on the quarterly basis. Did he get a major promotions? It appears that he makes too much (I'm guessing that he might be single and his salary must be north of 80K-90K/Yr), and does not have enough deductions to cover, even by claiming zero (see my example below).

In my case, I am single and make enough money, where I would owe when I claim zero (low six figures). Therefore, on my W-4 (upon hiring), I ask for additional withholding of $150 on Federal (paid every two weeks), and $75 for State on each pay check. I avoid this form by making this election. In essence, I am making estimated payments by making this election. I just got a large bonus check, and I'm concerned that I might not have had enough withheld (bonuses only have 25% withheld, but might put me in a higher tax bracket - although treated like supplementary income at withholding, I think it all counts toward your taxable income). I got a refund last year, but not enough to completely get rid of extra withholding. Ideally, you would like to owe nothing and pay nothing, but tax laws change as often as UK fans change moods during a ballgame.

I'm not really an expert on income tax, but I know a little bit. I am a finance manager, but not for tax.

 

[BlueWorldOrder74]

Thanks all for info. I will pass it on to him. The letter instructs him to use the estimator to guide his new W-4; which they say he should fill out and send in to his employer.

he makes about $55K per year. He received no promotion, but just started this pay rate in this job in middle of year, coming from a job wheee he was making much less.