W-2 form shows my employer barely withheld taxes. Do they owe me money?

Dear Tax Talk,
I filled out a W-4 form as single with zero dependents, and I have not received a paycheck stub in eight weeks. Then I got my W-2 form from the company in the mail and they barely held out any taxes. Is any of this legal on the company’s part? So I think either the W-2 is wrong or they owe me more money! Please help in Oklahoma.
— Delana

Dear Delana,
The company is required to withhold your federal taxes based upon the Form W-4 Employee’s Withholding Allowance Certificate that you completed.

The next step is for you to check the accuracy of your Form W-2 Wage and Tax Statement that you received as it reports the wages paid to you and the taxes withheld.

Employers are generally required to issue Form W-2 to their employees by Jan. 31, 2017. So anyone who has not yet received the form should receive it shortly. In order to check the accuracy of your Form W-2, it would be much easier if you had copies of your paystubs.

However, if you kept good records of the hours you worked each pay period and since you know your hourly rate, you should be able to go back and calculate if the Form W-2 is correct. My recommendation is to set up a simple spreadsheet showing the date for each pay period, how many hours you worked multiplied by your hourly rate. This will give you your gross pay.

More steps you can take

The next step is to go to the IRS website and download a copy of Publication 15 (Circular E), Employer’s Tax Guide. You will need to know how often you were paid and use the table based on your gross pay calculated above to see the amount of federal income tax that should have been withheld from each paycheck.

You will then take each pay period calculation and fill in your spreadsheet for the gross pay, adding a new column for federal taxes withheld. Total your columns for gross wages and federal taxes withheld and compare that to your Form W-2.

If you find an error, your employer will need to correct it and give you a Form W-2c, Corrected Wage and Tax Statement.

If you try to reconcile to the net pay direct deposited to your bank account, you need to take into consideration Social Security and Medicare taxes withheld and any payroll deductions you signed up for, but that is not necessary at this point.

Thanks for the great question and all the best to you in figuring this out!

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