FICA was not withheld from my paycheck
Should I have a W-2 re-issued? A W-2 can be corrected and a new copy will be filed with the IRS if your employer incorrectly reported your income and withholding on a W-2 that they issued. In this case, though the employer didn't withhold those taxes, they should not reissue the W-2 unless they plan to pay your portion of the payroll taxes that were not withheld. (If they paid your share of the taxes, that would increase your gross income.) Who pays for the FICA I should have paid last year? Both you and your employer owe 7.65% each for FICA taxes. By law your employer is required to pay their half and you are required to pay your half. Both you and your employer owe additional taxes because of this mistake. Your other questions assume that your employer will pay your portion of the taxes withheld. You employer could decide to do that, but this also assumes that it was your employer's fault that the mistakes were made. If you transitioned to resident alien but did not inform your employer, how is that your employer's fault? According to this section in Publication 15:  Collecting underwithheld taxes from employees.   If you withheld no   income, social security, or Medicare taxes or less than the correct   amount from an employee's wages, you can make it up from later pay to   that employee. But you’re the one who owes the underpayment.   Reimbursement is a matter for settlement between you and the employee.   [...] it seems that if the employer withheld less than the correct amount of FICA taxes from you, it is still the employer who owes your FICA taxes to the government, not you. I do not believe there is a way for you, an employee (not self-employed), to directly pay FICA taxes to the government without going through the employer. The employer can deduct the underwithheld amount from you future paychecks (assuming you still work for them), or settle it with you in some other way. In other words, you owe the employer, and the employer owes the government, but you do not directly owe the government. If they do deduct it from your future pay, then they can issue a corrected W-2, to reflect the amount deducted from you. But they cannot issue a corrected W-2 that says FICA were deducted from you if it wasn't.
"Look at how much tax you paid last year, including withholding and any additional amount that might have been due with the tax return. Look at the instructions for the W-4 form, which sets how much tax you want your employer to withhold. Adjust the numbers on that form until the total withheld during the year is close to what you expect this year's total to be -- remember, though, that there's no penalty for over-withholding but could be for under-withholding. Submit the W-4 form to your employer.  Remember that we're a few weeks into the year, so even if you adjust withholding now there will have been several paychecks at the prior setting; you can try to build that into your guesstimate of how to reset the withholding, or just not worry about it. Do the same with your state's withholding adjustments form. Repeat on a yearly basis, to account for raises, changes in other income, changes in filing status, etc. until it's close enough that you're satisfied with it. Then reconsider if/when your financial situation changes. Personally I find that exercise more effort than it's worth, and have simply set my withholding at ""close enough"". I usually get some money back from the feds and owe some to the state, but either is handled happily by my normal bank account balance." As I commented, there's confusion on withholding. The 20% pertains to 401(k) accounts, not IRAs. I know nothing about this, but found this link which suggests for H&R Block specifically: I kept searching and I found the section. It's at the end in the Credits section under 'other backup withholding'. Hopefully this helps someone else in the future. "Your question does not say this explicitly, but I assume that you were once a W-2 employee.  Each paycheck a certain amount was withheld from your check to pay income, social security, and medicare taxes.  Just because you did not receive that amount of money earned does not mean it was immediately sent to the IRS.  While I am not all that savvy on payroll procedures, I recall an article that indicated some companies only send in withheld taxes every quarter, much like you are doing now.  They get a short term interest free loan.  For example taxes withheld by a w-2 employee in the later months of the year may not be provided to the IRS until 15 January of the next year.   You are correct in assuming that if you make 100K as a W-2 you will probably pay less in taxes than someone who is 100K self employed with 5K in expenses.  However there are many factors.  Provided you properly fill out a 1040ES, and pay the correct amount of quarterly payments, you will almost never owe taxes.  In fact my experience has been the forms will probably allow you to receive a refund.  Tax laws can change and one thing the form did not include last year was the .9% Medicare surcharge for high income earners catching some by surprise.    As far as what you pay into is indicative of the games the politicians play.  It all just goes into a big old bucket of money, and more is spent by congress than what is in the bucket.  The notion of a ""social security lockbox"" is pure politics/fantasy as well as the notion of medicare and social security taxes.  The latter were created to make the actual income tax rate more palatable.     I'd recommend getting your taxes done as early as possible come 1 January 2017.  While you may not have all the needed info, you could firm up an estimate by 15 Jan and modify the amount for your last estimated payment.  Complete the taxes when all stuff comes in and even if you owe an amount you have time to save for anything additional.  Keep in mind, between 1 Jan 17 and 15 Apr 17 you will earn and presumably save money to use towards taxes.  You can always ""rob"" from that money to pay any owed tax for 2016 and make it up later. All that is to say you will be golden because you are showing concern and planning.  When you hear horror stories of IRS dealings it is most often that people spent the money that should have been sent to the IRS." There's no reason why you couldn't have your work withhold the money for you, but you have to keep a close eye on it an file paperwork causing extra work for yourself and the payroll department. You also have that money withheld weekly instead of keeping access to the money until the end of the quarter if you paid directly to the treasury. From your comment: My salary through 7/31 could pass for an annual salary for the   industry. I suppose that’s relevant? That information would certainly be relevant if you were the owner since the beginning of the year. If that were the case then I would say you'd be fine skipping the salary for the rest of the year. It would be equivalent to simply front-loading your salary. However, since you didn't own any part of the company during the time you received the salary, I believe you should think of that salary as if it came from an entirely different company. This means that during the 5 months you owned the company you will have taken $0 in salary, and I believe that would not be reasonable if this job is your main source of income. As a side note, regarding this statement you made: During this time, I'd like to avoid the employer half of FICA taxes incurred by paying myself through payroll. You'd actually be avoiding both the employer and employee portion of FICA, since both sides of FICA are paid for employee compensation. FICA is not paid by either side on company profits. Is that normal? Yes. It's in fact pretty low. Just the FICA taxes you pay are ~7.5%, so you're paying ~21% for State and Federal. Pretty reasonable, especially if you live in a high-tax state (which MA is ~5.3% on all income). It will usually take a week or two for changes to your withholding to take effect in payroll.  However 0 deductions will withhold more per check than 3.  So if at 0 deductions you are having to pay in April then I would suggest not changing your W2 to 3 deductions.  Instead in the section for extra with holding add $25 per week.  This should leave you with a more manageable return in April. "The decision whether this test is or is not met seems to be highly dependent on the specific situation of the employer and the employee.  I think that you won't find a lot of general references meeting your needs. There is such a thing as a ""private ruling letter,"" where individuals provide specific information about their situation and request the IRS to rule in advance on how the situation falls with respect to the tax law.  I don't know a lot about that process or what you need to do to qualify to get a private ruling.  I do know that anonymized versions of at least some of the rulings are published.  You might look for such rulings that are close to your situation. I did a quick search and found two that are somewhat related: As regards your situation, my (non-expert) understanding is that you will not pass in this case unless either (a) the employer specifies that you must live on the West Coast or you'll be fired, (b) the employer would refuse to provide space for you if you moved to Boston (or another company location), or (c) you can show that you could not possibly do your job out of Boston.  For (c), that might mean, for example, you need to make visits to client locations in SF on short-notice to meet business requirements.  If you are only physically needed in SF occasionally and with ""reasonable"" notice, I don't think you could make it under (c), although if the employer doesn't want to pay travel costs, then you might still make it under (a) in this case." No not deductible. But - If you work more than one job, you run the risk of having too much SS withheld. Each employer doesn't know what the others pays you. Tax time reconciles this.  And much thanks to Dilip for the following clarification - Not only does each employer not know what the others pays you, but even if you tell him, he will not care. He is required to withhold Social Security tax on the wages he pays you (and send in an equal amount as his contribution) regardless of what anyone else pays you. If the sum of your taxable wages from all employers exceed the maximum wages subject to Social Security, the excess withholding is credited towards the income tax due (and thus reduces the amount to be paid or increases the refund you are owed) but the employer's (excess) contribution that he sent in is not returned to him..... Also, there is no such things as excess Medicare tax having been withheld because there is no maximum wage beyond which Medicare tax does not apply. Employer match doesn't incur FICA tax (social security, medicare) for you at all - either current year or when you withdraw. All you have to pay is income tax when you withdraw after retirement age. (Disclaimer - I'm not tax professional but has done my research) You can file a revised W-4 with your employer claiming more allowances than you do now. More allowances means less Federal tax and (if applicable and likely with a separate form) less state tax. This doesn't affect social security and Medicare with holding, though.  That being said, US taxes are on a pay-as-you-go system. If the IRS determines that you're claiming more allowances than you're eligible for and not paying the proper taxes throughout the year, they will hit you with an underpayment penalty fee, which would likely negate the benefits of keeping that money in the first place. This is why independent contractors and self-employed people pay quarterly or estimated taxes. Depending on the employer, they may require proof of the allowances for adjustment before they accept the revised W-4. There are ways to avoid having federal income taxes withheld:  In order to avoid withholding altogether, you’ll have to fall into   both of the following categories: you have no tax liability this year   and you had no tax liability in the previous tax season, so all of the   federal income tax you paid was given back to you. Generally, you can   say you have no tax liability when you’re not required to file an   income tax return or you owe zero taxes. You may also be able to claim   an exemption if your earned income for the year is extremely low   ($1,050 or less). If those conditions apply to you, you can write “exempt” in line 7.   Keep in mind that the exemption only eliminates your federal income   taxes, not your Medicare or Social Security. If your parents use an accountant to prepare their taxes, I'm sure he/she would be able to give you a solid answer on how to fill it out. Do you have a regular job, where you work for somebody else and they pay you a salary? If so, they should be deducting estimated taxes from your paychecks and sending them in to the government. How much they deduct depends on your salary and what you put down on your W-4. Assuming you filled that out accurately, they will withhold an amount that should closely match the taxes you would owe if you took the standard deduction, have no income besides this job, and no unusual deductions. If that's the case, come next April 15 you will probably get a small refund. If you own a small business or are an independent contractor, then you have to estimate the taxes you will owe and make quarterly payments. If you're worried that the amount they're withholding doesn't sound right, then as GradeEhBacon says, get a copy of last year's tax forms (or this year's if they're out by now) -- paper or electronic -- fill them out by estimating what your total income will be for the year, etc, and see what the tax comes out to be. In common with many companies, Microsoft has been engaging in share buyback programmes, where it buys its own shares in the market and then cancels them. It's often a more tax-efficient way to distribute profits to the shareholders than paying a dividend. So there were more Microsoft shares in circulation in 1999 than there are now. See here for information.