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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10162
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am a school employee, in the summer I am paid by voucher

Customer Question

I am a school employee, in the summer I am paid by voucher for summer school. The school district is not taking taxes out of the wages I earned is that allowable as well as legal. The sum of the money earned is shown as wages on my annual w2.
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
I work in the state of New Jersey. I know New Jersey go figure.
Expert:  Lane replied 1 year ago.

Hi,

....

... can only speculate as to why they are not withholding.

...

The "bot***** *****ne" here is that you'll need to pay the taxes either way.

....

What you might want to consider is making an estimate payment to offset their not withholding.

...

The reason ... is that you may end up with an underpayment penalty at tax time (a not so subtle reminder that we have a "pay as you go" system) in the U.S.

...

From IRS;

"If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, or if they paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller."

...

You can read more here: http://www.irs.gov/taxtopics/tc306.html

...

Here's the voucher that can be used to make quarterly estimated payments (used by independent contractors and other who don't have withholding dome FOR them): http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Please let me know if you have more questions.

...

Expert:  Lane replied 1 year ago.

Hi,

....

... can only speculate as to why they are not withholding.

...

The "bot***** *****ne" here is that you'll need to pay the taxes either way.

....

What you might want to consider is making an estimate payment to offset their not withholding.

...

The reason ... is that you may end up with an underpayment penalty at tax time (a not so subtle reminder that we have a "pay as you go" system) in the U.S.

...

From IRS;

"If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, or if they paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller."

...

You can read more here: http://www.irs.gov/taxtopics/tc306.html

...

Here's the voucher that can be used to make quarterly estimated payments (used by independent contractors and other who don't have withholding dome FOR them): http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Please let me know if you have more questions.

...

Customer: replied 1 year ago.
Thank you. I think they are just lazy. The Business Administrator told me the new system they went to will not withhold taxes on a voucher. I think they need a new system.Thank you for your help.
Expert:  Lane replied 1 year ago.

You're very welcome ... The best practice would be that they should withhold ... but from a tax law perspective, it's about you being sure to get it done for yourself.

...

I agree, they're taking the path of least resistance.

...

Hope this has helped

...

Lane

...

If this HAS helped, and you don’t have additional questions on this, your positive rating … (by clicking or touching the stars or smileys on your screen) … would be appreciated!That’s the only way I'll be credited a portion of what you've paid JustAnswer.

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