Have a Tax Question? Ask a Tax Expert
You are required to keep all records of employment taxes for at least four years after filing the 4th quarter for the year. These should be available for IRS review. Copies of employees' and recipients' income tax withholding allowance certificates (Forms W-4) are among those records.
You will not be in trouble with the law for misplacing this W4.
Have the employee complete another W4 and make sure to keep that in the employee's file.
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Ultimately the responsibility to have the correct tax withheld is on the employee. When they file their tax for 2015 they may have additional tax to pay but it is not tax that was increased by the withholding having 2 allowances instead of zero.
They would have paid that tax during the year.
As the situation has been corrected there is nothing else to do. This is not the same as if you never deposited the amounts withheld. It was a mistake.
Every worker is responsible for telling his or her employer how many exemptions he or she is entitled to on a Form W-4 -- and for seeing that the employer follows those instructions.
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There is nothing you should be doing.
She is not satisfied because she enjoyed the little extra income all year and now sees that she most likely owes it at filing or is getting less of a refund.
The IRS is not going to pay attention to any complaint that she would make.
Yes the records form now on need to be retained but you are not obligated to reimburse her or make any other correction.
I hope you see your position now.
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