Troubleshoot no income tax withheld from a paycheck

Find out why your employee’s federal or state income tax is $0.00 in QuickBooks.

Sometimes you or your employee may notice $0.00 for federal or state withholding on their paycheck. Don’t worry, this is normal if your employee claims exempt, or if they don’t have enough wages to meet the minimum threshold.  

If you or your employee think withholding taxes should be deducted from their paycheck, there are a few things you can check to be sure. 

Step 1: Check your employee’s federal and state withholding forms 

You’re required to get a federal W-4 and state withholding equivalent form (if applicable) from each of your employees. Check these forms with your employee to make sure they’re correct. 

Your employee’s federal or state withholding tax calculation may depend on several factors:

• How much your employee is paid
• How often your employee is paid
• Marital status
• Number of dependents
• Other sources of income

To understand minimum thresholds for federal withholding, check out IRS Publication 15-T. For state withholding, check out your state withholding agency website. 

Step 2: Check your employee’s tax setup in your payroll product 

Check out Enter federal Form W-4 in QuickBooks Payroll for steps to get to the tax withholding section in your employee’s profile. 

Make sure the filing status and all other applicable fields match your employee’s W-4 or state equivalent forms. 

If your employee’s filing status is set to Exempt or Do not withhold, withholding taxes won’t be deducted from their paycheck, regardless of their gross wages. 

If your employee shouldn’t be exempt from withholding taxes, you can change their filing status to the appropriate one.