Hello,

One of my friend's employer didn't withheld federal & state tax for the entire year 2006. Now his current year's tax is around $3,000. Last year's tax was around $275.

I want to know, whether he is supposed to pay any penalty or interest? If yes, then is there any option for paying only tax with the return & IRS will calculate penalty & send the bill? Or does he have to calculate penalty himself & pay when he pays tax.

How about State tax? He is in NJ.

Thanks in advance.

Doesn't he just prepare his tax return declaring everything he made for that year. Then he is assessed by the tax department, sent an assessment and he either pays or gets a refund.

First why is there no withholding, are they paying the medicare tax or withholding it out.

Do they get a W2 or do they get a 1099.

That is the first issue to resolve.

But he needs to merely file and pay the tax due after his deductions.

Medicare & Social security taxes were withhed.
When he asked why his State & Federal taxes were not withhed, his HR department gave some Bull reasons like as u were on OPT last year, I didn't held your taxes. However, I don't see any connection.
He received W-2.

The HR Department screwed up. Hope your friend had the money to pay the tax when due, or else he will have to use a payment plan andpay set-up fees and interest.