Why Are Federal Taxes Not Coming Out of My Paycheck?

Federal taxation represents as much as 35 percent of the American taxpayer's income, considering federal income tax, Social Security and Medicare tax. Employers are required to withhold taxes from wages and salaries and submit them to the Internal Revenue Service at intervals. Your employer could be erroneously neglecting to withhold taxes, or it may not be required.

Contractors

• Your employer may treat you as an independent contractor. The employer takes no money from the wages or salary of the independent contractor and has no responsibility for payment to the IRS. The contracting company does not withhold or pay Medicare or Social Security required payments for contract employees, nor do they withhold federal, state or local income tax. Contractors are not employees and are personally required to pay their own federal income taxes as an independent contractor or a business. Schedule C for Form 1040 is the appropriate IRS form for most sole proprietors or independent contractors operating a business.

Errors

• Filing a W-4 form is the first step to withholding. If you have not filed a W-4 form at your place of employment declaring the number of dependents you have and providing a Social Security number to your employer, you may not be in the withholding system.

Deductions vs Pay

• If you are a part-time employee, you may not make enough to have taxes withheld.Under the 2010 employer tax tables, a single person can make $116 a week or $233 biweekly without withholding. However, if you claim yourself on a W-4 and someone else -- like your parents -- claim you as a dependent, or if you work several part-time jobs, you may end up owing too much at the end of the year.

Payment

• You can correct any errors in withholding when you file the Form 1040 after the end of the tax year. The IRS bases federal income taxes on income, dependents and deductions.You can pay with credit card or file Form 9465 (Installment Agreement Request) with your Form 1040 for a payment agreement. If you file your Form 1040 on time, you may get 120 days to pay amounts you owe. Failure to file a tax return timely or request an extension has severe penalties.

Remedies

• Independent contractors often deposit federal income tax and FICA tax estimates quarterly to avoid penalties. Once you file a Form 1040 and a Schedule C as a business or contractor, you will receive information for quarterly deposits.

  If you think taxes are not being withheld from your paycheck due to an error, check with your supervisor or your employer's bookkeeping department.

  If you work more than one part-time job and find you end up owing money at the end of the year, submit a W-4 to your employer to have more withheld from your paycheck.