Is there any sort of tax write off for unfulfilled pay checks?
Unfortunately, no.  Think about the numbers. If you work for me, and I pay you $1000, you owe tax on $1000. If you still work, but I don't pay you, you have no tax due, but there's no benefit for you to collect for my stealing your time. If you don't receive a W2, there are 2 scenarios you should consider: If you have reason to believe that scenario 1 is accurate, then you could file your taxes based on the last valid paycheck you received. If you have reason to believe that scenario 2 is accurate, then you need to do some extra math, but fortunately it is straight forward. Simply treat your final paychecks as if the gross amount of your check was equal to the sum of your taxes paid, and the net amount of the check is $0. This way your income will increase by the proper amount, and you will still receive credit for the taxes paid. This should work out cleanly for federal and state taxes, but will likely result in an overpayment of FICA taxes. You can use form 843 to receive a refund of excess FICA taxes. As a side note, I'd recommend spot checking the YTD numbers on your last paychecks against previous paystubs to make sure there wasn't any fuzzy math going on when they realized they were going out of business.
"If you don't want to get income tax taken out of your check, then get a 1099 job and stop blubbering like a baby. You are not doing your case any help. If fact, I am more positive that ""anti-taxers"" are out of their gourd." Either make your best guess, or set it low and then file quarterly Estimated Tax payments to fill in what's missing, or set it high and plan on getting a refund, or adjust it repeatedly through the year, or... No, there is no special leniency given to first time tax payers. In general, this shouldn't be an issue. The IRS collects your taxes out of every one of your paychecks throughout the entire year in what is called a Withholding Tax. The amount that the IRS withholds is calculated on your W-4 Form that you file with your employer whenever you take a new job. The form helps you calculate the right number of allowances to claim (usually this is the number of personal exemptions, but depending upon if you work a second job, are married and your spouse works, or if you itemize, the number of allowances can be increased. WITHHOLDING TAX Withholding tax (also known as “payroll withholding”) is essentially income tax that is withheld from your wages and sent directly to the IRS by your employer. In other words, it’s like a credit against the income taxes that you must pay for the year. By subtracting this money from each paycheck that you receive, the IRS is basically withholding your anticipated tax payment as you earn it. In general, most people overestimate their tax liability. This is bad for them, because they have essentially given the IRS an interest free loan (and weren't able to use the money to earn interest themselves.) I haven't heard of any program targeted at first time tax payers to tell them to file a return, but considering that most tax payers overpay they should or they are giving the government a free grant. Yes, there are checks and balances.  Employers can be, and have been, prosecuted for failing to pay super before the statutory timeline, which is three months from the pay date. However, it is still in your interests to check for yourself.  The most common point for missing super to be discovered is when the company goes broke, at which point it's too late for you.  What you should do is  Check on your payslips that the right amount is allocated to super.  It should be 9% of gross, plus any salary sacrifice or additional component. Check your super fund's half-yearly statements line up the deductions given on your payslip. Consider getting online access to your super account so you can check more quickly. If something is missing, call your super fund and/or payroll office. Resources: "So after a great deal of clarification, it appears that your question is how to adjust your withholding such that you'll have neither a refund, or a balance due, when you do your 2016 taxes next year.  First, a little terminology. The more you have withheld, the more money will be taken out of your check to cover your estimated tax liability. Confusingly, the more allowances you select on your W-4, the less money you will have withheld (more allowances means more dependents/deductions/other reasons why you will owe less tax). When you go to file your 2015 tax return next year, you'll figure out exactly how much you owe. If you had too little tax withheld, you'll have to pay the difference. If you had too much tax withheld, you'll get a refund back.  Given your situation, simply following the instructions on the W-4 should work pretty well. If you want to be more precise, you can use the IRS Withholding Calculator to figure the number of allowances and submit a new W-4 to your employer.  It's a little hard to tell whether ""paying this much/year in taxes seem steep?"" because you've lumped all the taxes together in one big bucket. Does the $543.61 in taxes per paycheck include Social Security (OASDI) and Medicare taxes? Whatever you do, it's not going to be an exact science. Come tax time, you'll figure out exactly what you owe and either pay the balance or get a refund back. As long as you're relatively close, that's fine. You can always adjust your withholding again next year after you've done your taxes." I actually think your boss is creating a problem for you. Of course it's taxable. The things IRS will look at (and they very well might, as it does stand out) what kind of payment is that. Why did it not go through payroll? The company may be at risk here for avoiding FICA/FUTA/workers' compensation insurance/State payroll taxes. Some are mandatory, and cannot be left to the employee to pay. On your side it raises your taxable income without the appropriate withholding, you may end up paying underpayment penalties for that (that is why you've been suggested to keep proofs of when you were paid). Also, it's employment income. If it is not wages - you're liable for self-employment taxes (basically the portion of FICA that the employer didn't pay, and your own FICA withholding). When you deposit the check is of no matter to the IRS, its when you got it that determines when you should declare the income. You don't have a choice there. I suggest asking the company payroll why it didn't go through them, as it may be a problem for you later on. Sorry, it appears not, according to http://www.nysscpa.org/cpajournal/2008/508/perspectives/p12.htm: ...and the election to make Roth 401(k) contributions (these are after-tax contributions) is irrevocable.  Fairmark says the same thing. PS, don't complain too loudly, given the reason for the problem. :) If you're under audit - you should get a proper representation. I.e.: EA or CPA licensed in California and experienced with the FTB audit representation. There's a penalty on failure to file form 1099, but it is with the IRS, not the FTB. If I remember correctly, it's something like $50 or $100 per instance. Technically they can disqualify deductions claiming you paid under the table and no taxes were paid on the other side, however I doubt they'd do it in a case of simple omission of filing 1099 forms. Check with your licensed tax adviser. Keep in mind that for the IRS 2011 is now closed, since the 3-year statute of limitations has passed. For California the statute is 4 years, and you're almost at the end of it. However since you're already under audit they may ask you to agree to extend it. Yes. W4 determines how much your employer will withhold from your wages. Leaving everything at default would mean that your salary is your only taxable income, and you only take default deductions. Your employee will calculate your tax withholding based on that. But, if your salary is >200k, I assume that you have other income (investment/capital gains, interest on your bank account), which you will have to pay taxes on. You're probably going to have some deductible expenses (business/partnership expenses, mortgage interest, donations, college funds etc) as well. So it is very likely, unless you're really not smart about money, that you have more to do with your taxes than just the employers' withholding. She filed for 0 withholdings in her W4, so my (unprofessional) guess   was that she'd be owed money, and therefore the IRS wouldn't care much   if she didn't file her taxes.† Maybe, but doesn't she want that money back? Is she at as much risk as any other individual of being audited and   penalized to the same degree if she skips filing her taxes? Audited and penalized are not the same. She's at the same risk of being audited, and even slightly higher since the IRS got reports of her wages, but didn't get the matching report from her. They may want to ask why. But it doesn't mean she's going to be penalized for anything. Being audited doesn't mean you did something wrong. Or does the IRS tend to overlook such individuals. The IRS might want to overlook because they're the ones owning money. She cannot get a refund without filing a tax return. She'd file her taxes today if she could, but the worry is that time's   running out Filing an extension is free and it postpones the deadline to file till OCTOBER! 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? "What they are doing is wrong. The IRS and the state might not be happy with what they are doing.  One thing you can ask for them to do is to give you a credit card for business and travel expenses. You will still have to submit receipts for expenses, but it will also make it clear to the IRS that these checks are not income. Keep the pay stubs for the year, or the pdf files if they don't give you a physical stub. Pay attention to the YTD numbers on each stub to make sure they aren't sneaking in the expenses as income. If they continue to do this, ask about ownership of the items purchased, since you will be paying the tax shouldn't you own it?  You can in the future tell them ""I was going to buy X like the customer wanted, but I just bought a new washer at home and their wasn't enough room on the credit card. Maybe next month""" "Take a look at IRS Publication 15. This is your employer's ""bible"" for withholding the correct amount of taxes from your paycheck. Most payroll systems use what this publication defines as the ""Percentage Method"", because it requires less data to be entered into the system in order to correctly compute the amount of withholding. The computation method is as follows: Taxes are computed ""piecewise""; dollar amounts up to A are taxed at X%, and then dollar amounts between A and B are taxed at Y%, so total tax for B dollars is A*X + (B-A)*Y. Here is the table of rates for income earned in 2012 on a daily basis by a person filing as Single: To use this table, multiply all the dollar amounts by the number of business days in the pay period (so don't count more than 5 days per week even if you work 6 or 7). Find the range in which your pay subject to withholding falls, subtract the ""more than"" amount from the range, multiply the remainder by the ""W/H Pct"" for that line, and add that amount to the ""W/H Base"" amount (which is the cumulative amount of all lower tax brackets). This is the amount that will be withheld from your paycheck if you file Single or Married Filing Separately in the 2012 TY. If you file Married Filing Jointly, the amounts defining the tax brackets are slightly different (there's a pretty substantial ""marriage advantage"" right now; withholding for a married person in average wage-earning range is half or less than a person filing Single.). In your particular example of $2500 biweekly (10 business days/pp), with no allowances and no pre-tax deductions: So, with zero allowances, your employer should be taking $451.70 out of your paycheck for federal withholding. Now, that doesn't include PA state taxes of 3.07% (on $2500 that's $76.75), plus other state and federal taxes like SS (4.2% on your gross income up to 106k), Medicare/Medicaid (1.45% on your entire gross income), and SUTA (.8% on the first $8000). But, you also don't get a refund on those when you fill out the 1040 (except if you claim deductions against state income tax, and in an exceptional case which requires you to have two jobs in one year, thus doubling up on SS and SUTA taxes beyond their wage bases). If you claim 3 allowances on your federal taxes, all other things being equal, your taxable wages are reduced by $438.45, leaving you with taxable income of $2061.55. Still in the 25% bracket, but the wages subject to that level are only $619.55, for taxes in the 25% bracket of $154.89, plus the withholding base of $187.20 equals total federal w/h of $342.09 per paycheck, a savings of about $110pp. Those allowances do not count towards other federal taxes, and I do not know if PA state taxes figure these in. It seems odd that you would owe that much in taxes with your withholding effectively maxed out, unless you have some other form of income that you're reporting such as investment gains, child support/alimony, etc. With nobody claiming you as a dependent and no dependents of your own, filing Single, and zero allowances on your W-4 resulting in the tax withholding above, a quick run of the 1040EZ form shows that the feds should owe YOU $1738.20. The absolute worst-case scenario of you being claimed as a dependent by someone else should still get you a refund of $800 if you had your employer withhold the max. The numbers should only have gotten better if you're married or have kids or other dependents, or have significant itemized deductions such as a home mortgage (on which the interest and any property taxes are deductible). If you itemize, remember that state income tax, if any, is also deductible. I would consult a tax professional and have him double-check all your numbers. Unless there's something significant you haven't told us, you should not have owed the gov't at the end of the year." For most Americans the date on the check determines the tax year.  A check with the date of Jan X 2016 will be reflected on the tax forms you will file in early 2017. That also means that the 401K money is also 2016 money, and so is the money for the flexible spending account, or health savings account. The change of year impacts everybody differently. That last/first check can make a big difference for some people. If you are trying to make sure you deposit the maximum amount of money into one of those accounts, knowing how many pay checks there is in the year is important. It also works the other way, getting an extra check can cause you to over deposit into those accounts. The taxes for that Jan 2016 paycheck are collected by your employer and periodically sent to the appropriate government office. You are paying those taxes on payday, even though you won't file that paperwork until 2017. To address the travelers checks question: waste of time and money. I did this years ago, the fees were outrageous, it was a hassle to find some place to cash them, and in the end you're carrying cash anyway. Otherwise do what orokusaki said.