[Vandana]

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.

[tickle]

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.

[Fr_Chuck]

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.

[Vandana]

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.

[AtlantaTaxExpert]

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.