Hi @Kidscove. There are a few reasons why a specific employee might not be paying federal taxes right now. All of them are tied to gross pay that falls below the annualized threshold for those taxes. The employee might claim a lot of exemptions, or they might have said on their w-4 that they were exempt from federal taxes, for example. Also, each filing status (single, married filing jointly, head of household, etc) has different gross pay thresholds that apply — employees whose annualized gross pay doesn’t meet those thresholds won’t have federal taxes taken out. It’s very complicated, unfortunately.
If you are concerned, first review the employee’s w-4 to be sure it is correct. That is often the culprit. I had an employee last year who had claimed 4 exemptions even though she was single with no dependents. So the mistake was hers that we had to correct.
Lastly, since I run an ice cream shop that is seasonal and part-time, it is not unusual for some of my employees not to pay federal taxes, or at least to pay very little in the way of federal taxes. If you are really concerned I would recommend consulting with your accountant. But I’ve never known Square’s tax calculations to be too far off.
Regards,
Chip A.
Square Expert & Innovator and member of the Square Champions group. (But NOT a Square employee, just a seller like you)
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