As a business owner, you know it's the law to give your employees detailed pay information, whether that's online or a paper pay statement. But what if tax time comes for your employee, and they find out their income taxes weren't withheld correctly from their pay? Are you in trouble?
Here's the simple answer: If you provide your employees with a detailed pay statement for every payroll, then it's your employees' burden to verify that their tax withholdings are correct.
It's Not Your Fault
If your employee did not have enough income tax withheld, it doesn't automatically mean you're to blame. Your job is to provide your employees with their pay details. After that, it's your employee's responsibility to check their pay statements to verify that the right amount of taxes is being withheld.
Why Pay Statements Matter
Pay statements are super important. They show how much someone earned, what taxes were taken out, and any other statutory and voluntary deductions. Giving detailed pay statements with every payroll gives your employees the ability to check on their own and verify if their tax withholdings are right.
What to Do If There's a Tax Mix-Up
Mistakes happen. If an employee comes to you worried about their withholding taxes, it's a good chance to talk about checking their pay statements more often.
Your employee can talk with their tax preparer and can always complete a new W-4 Form to adjust the amount of their withholding, either up or down, if they need to.
The same holds true for state and local withholding taxes, if applicable in your employee's home state.
How Baron Payroll Can Help
If providing your employees with an easy-to-read pay statement that also displays their W-4 withholding choices would be valuable to you and your employees, Baron is a great choice.
With Baron, your employees will see all their important pay information in one place, including a copy of their time cards showing the days and times worked each pay period. It's all there in one place - eliminating any questions back to you and providing you with complete records that are easy to retrieve, even years later.
Curious how much it costs to work with us? Use our instant price calculator to get your detailed price without even talking with a salesperson.
Bottom Line
You're not at risk if an employee's taxes aren't correct as long as you provide your employees with their detailed pay information.
Another best practice we suggest is to have your employees complete a new W-4 Form at the beginning of every year - or at least offer them the option to do so.
If you're frustrated with your current payroll provider and struggle to get help from their overworked and inexperienced staff, consider switching to Baron Payroll and get the attention and advice you deserve.
If you found this article helpful, here are some others you might like:
- How Much Do Payroll Services Cost?
- 1099 vs W2 Employee - An Honest Cost Comparison for Business Owners
- Why are my W2 Wages Lower Than my Salary?
- How to Choose the Best Payroll Company for Your Small Business
- The Pros and Cons of Paying Employees with Payroll Paycards
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