Is it true that adding additional federal witholding to a paycheck will result in errors and fees ?

Thank you for reaching out to the Community forum with such thorough information, missjulia101. I'll share insights regarding incorrect Federal Income Tax withholdings in QuickBooks Desktop Payroll.

QuickBooks Desktop (QBDT) computes Federal Income Tax (FIT) withholding using the wage bracket method as specified in IRS Publication 15-T, rather than relying on an annualized percentage method. This ensures that FIT amounts are adjusted for each paycheck based on factors like bonuses or additional pay, which may vary throughout the year. Additionally, these calculations conform to the latest tax table for 2025.

For additional details, you can refer to this article: Understand how your payroll taxes are calculated.

Meanwhile, if your W-4 tax settings are correct, then you should not be concerned about any incorrect calculations regarding withholding taxes in your employees' paychecks. It’s essential to ensure that the information provided on the W-4 forms is accurate and up-to-date, as this directly impacts how much federal income tax is withheld from each paycheck.

You can view this thread for further information about how QuickBooks calculates FIT: https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/re-qbdt-withholding-the-wron...

Furthermore, here's an article you can read about the year-end checklist for preparing your tax forms in QuickBooks Desktop Payroll: Year-end checklist for QuickBooks Desktop Payroll.

I'm still ready to back you up if you need more help handling payroll. I'll keep the thread open so you can comment back.

@missjulia101  Giving a full answer would require more detail, but one thing to keep in mind is that QB does not adjust its federal and state income tax withholdings based on YTD information, unlike the social security and medicare taxes.

Because of this, it's not unusual for this kind of discrepancy to arise for most employees; since the withholdings are being calculated on a paycheck to paycheck basis, and the gross pay of most employees tends to fluctuate, it's quite possible for slow weeks to have no income tax withholding at all even as their gross pay rises.

This has to do in large part with the IRs' changes to the W4 from 2020; in short, they attempted to change it such that people break even on their income taxes, and it's caused nothing but trouble since.

If the gross wages for the pay period aren't projected to be higher than the standard deduction plus the effects of any dependents, it simply won't hold any federal income tax out on that paycheck as it doesn't expect any tax to be owed.

Anyway.

That QB representative was full of it. Don't let them stress you out.

As for what you can do, when my clients' employees ask me about this, I generally advise them to only fill out the W-4 as Single with no dependents and, if necessary, fill in an amount on the Extra Withholding line.

That being said, if the employee you mention is grossing approximately $70,000 per year, they will have $40,000 in taxable income after their $30,000 MFJ standard deduction.

The actual numbers will be lower as income taxes are stepped in brackets, but even if you were to apply the full 12% expected income tax rate to that $40,000, you'd have income tax of $4,800.

If they have held out $1,289 in Q1 2025 so far, then you'd reasonably expect them to hold out 4X that over the course of 2025, or $5,156. So, it sounds like it's not far off the mark as far as this specific employees' withholding.

It could be complicated if the husband also has income, but there's just not much QB can do about outside factors like that. They can't know what other sources of income this couple has. Maybe mark the 2 Jobs box if the couple have similar earnings throughout the year.

@missjulia101 

"For example, one of our employees has made 17,625 (adjusted gross) so far for 2025, but intuit has only taken out 1,289 in federal taxes. Given that this employee makes ~70k/year married filing jointly, their tax rate is around 12%, so this employee already owes over 1k for 2025!"

That's incorrect.  At this point, your employee owes $0 in federal income tax.  Remember that the standard deduction for MFJ filers is $30K, so your employee doesn't owe a dime in income tax until they make $30,001.  An MFJ filer (assuming no working spouse, dependents, or other adjustments) making $70K/year, pays $4,568 in federal income tax:

10% on the first $11,600 over $30,000 = $1,160

12% on the final $28,400 over $41,600 = $3,408

If your employee has paid $1,289 in federal income tax in 3 months, they will pay ~$5,156 in total income tax for the year which is more than enough.  Of course this depends on their exact situation based on their W-4.  

@FishingForAnswers 

Oops, sorry FFA.  Obviously, I didn't read your post first—my fault.   

@Rainflurry  Not at all; I went on a bit of a long ramble there. Much more likely that they'll appreciate the concise answer you gave.

But will I mess things up if I manually edit our weekly payroll for additional federal witholding ? Will QB charge me additional fees ? do I need to submit additional paperwork to the IRS ?

thank you so much for pointing out that the tiered tax structure does make a difference here

@missjulia101  "But will I mess things up if I manually edit our weekly payroll for additional federal witholding ?"

Not really, but you have no reason to do so. If they want extra withholding, have them refill out the W-4 with an amount in the extra withholding box.

"Will QB charge me additional fees ?"

No.

Well, not for this specific reason, anyway. I'm sure they'll charge you extra fees somewhere along the line for something.

"do I need to submit additional paperwork to the IRS ?"

No.