Several W-2s, a zero in Box 2 on each, and a bill nobody saw coming.
Every tax season brings a few bad surprises, and this is one of the most common. Picture six W-2s at $15,000 apiece, with a big fat zero in Box 2 on every one of them. Nobody did anything wrong, exactly. Six payroll departments just never talked to each other, and the IRS adds it all up in April. The same thing happens, more quietly, to married couples who both work and to retirees with a pension, Social Security and an IRA.
Current as of October 2026 · Figures are for tax year 2026
Each employer figures withholding as if theirs is your only job.
The payroll system assumes that this paycheck, multiplied out over a year, is your entire income, subtracts the standard deduction, and withholds tax on whatever is left. A $15,000-a-year job does not even reach the standard deduction, so the system sees nothing worth withholding. Social Security and Medicare still come out; federal income tax does not. Six employers each decide you owe nothing.
Then the return gets prepared, the IRS adds it all up, and you have earned $90,000 with nothing paid in. Federal tax on that is roughly $11,000 for a single filer, plus a possible underpayment penalty for not paying as you went.
Two-earner couples get a gentler version of the same thing. Each employer withholds as if that paycheck is the household’s only income, applying the full joint standard deduction and starting at the bottom of the brackets. Put the two incomes together and the second one lands in the 22% or 24% bracket while both employers withheld as if it were taxed at 12%.
The first thing we look at on a stack of W-2s is not Box 1. It is Box 2 divided by Box 1, job by job. A ratio near zero on a job that pays real money tells us the W-4 was never set up for a second income, and we can predict the balance due before the return is finished. The client sees a tax bill. We see six W-4s that need the same fix.
Six jobs, one standard deduction.
| Each job | All six | |
|---|---|---|
| Wages (Box 1) | $15,000 | $90,000 |
| Federal tax withheld (Box 2) | $0 | $0 |
| Federal tax actually owed | — | about $11,000 |
| Overall rate | — | about 12% |
| Withholding each job should have taken | about $1,800 a year | about $11,000 |
| Per paycheck, paid every two weeks | about $70 |
Each job on its own is below the $16,100 standard deduction for a single filer, so each payroll system correctly withholds nothing. Together they are a $90,000 income with one deduction. Figures are rounded.
The right withholding for each job is not the tax on that job alone; it is that job’s share of the tax on everything.
Get your withholding fixed now, whatever time of year it is.
The most reliable fix for multiple jobs. Figure the tax on your total income from all jobs, divide it among the jobs, and enter the per-paycheck amount in Step 4(c) of a new W-4 for each employer. In the example above, that is about $70 a paycheck at each job. Payroll adds that flat amount on top of whatever the tables say.
For married couples who both work, or one person with two similar jobs, checking the box in Step 2 on both W-4s tells each employer to withhold as if the standard deduction and the brackets were cut in half. It works well when the two incomes are close. When one spouse earns much more, Step 4(c) on the larger job is the better tool.
The IRS Tax Withholding Estimator does the arithmetic from your latest pay stubs. Or bring the stubs to us in the fall and we will run the numbers before the Bermuda Triangle swallows your refund.
A pension, Social Security and an IRA are three payers that never talk to each other either.
The plan withholds based on the W-4P you filed, often years ago, treating the pension as your only income. Add Social Security and an IRA and it is too low. A new W-4P with an extra amount per payment is the fix.
Social Security withholds nothing unless you ask. Form W-4V lets you choose 7%, 10%, 12% or 22% of the benefit. How much of your Social Security is taxed.
Unless you say otherwise, the custodian withholds 10% from an IRA distribution. Ten percent is rarely right for someone in the 22% bracket whose withdrawal also makes more of their Social Security taxable. You can pick any percentage, or have the whole year’s shortfall withheld from the December RMD.
Withholding is treated as paid evenly through the year no matter when it comes out. Estimated payments are credited only on the date paid.
The tax system is pay-as-you-go. Pay too little during the year and there is a charge for the delay.
The penalty is figured like interest on the amount you should have paid each quarter and did not. On $11,000 paid a year late it is real money, on top of the tax. Two tests, called the safe harbors, excuse it entirely.
| Test | Amount |
|---|---|
| This year’s tax | 90% |
| Last year’s tax, if last year’s AGI was $150,000 or less | 100% |
| Last year’s tax, if last year’s AGI was over $150,000 | 110% |
Meet either test and there is no penalty, though the balance itself is still due April 15. Estimated payments are due April 15, June 15, September 15 and January 15.
The “last year’s tax” harbor is the one we use for planning, because it is a number we already know in January. If a client’s income is going to jump this year, from a bonus, a Roth conversion or a sale, we set withholding or estimates to cover 100% or 110% of last year’s tax and stop there. The rest is owed in April with no penalty, and the client keeps the money until then.
A bill you cannot pay in April has a procedure.
File the return on time whether or not you can pay. The penalty for filing late is far larger than the penalty for paying late. Pay what you can with the return.
For the rest, we can include an installment agreement request with the return itself, so you pay the balance over time instead of all at once. Interest and penalties still apply until it is paid, but it turns an ambush into a monthly payment and keeps the collection letters away while you catch up. If there are earlier years that were never filed, see catching up with the IRS.
Then fix the withholding the same week. The worst version of this story is the one where the second year’s balance lands on top of the first year’s payment plan.
October and November are when this can still be fixed for the current year: there are paychecks left to make up a shortfall, and a December RMD can carry the rest. Bring your latest pay stubs or pension statements and last year’s return, and we will tell you what to change on each W-4, W-4P and W-4V. Call 303-734-1040.
The same triangle, at a flat 4.40%.
Colorado withholding is figured job by job too, and a small job may have nothing withheld for the state either. Colorado has its own underpayment penalty, its own estimated-payment schedule, its own withholding certificate for adjusting state withholding separately, and its own payment plan. Because the state tax is a flat 4.40% of federal taxable income, the shortfall is smaller, but it arrives in the same envelope. Colorado income tax.
Almost never. The payroll system did what the W-4 told it to do. The mistake, if there was one, was a W-4 that did not mention the other jobs.
Yes. Put the whole extra amount in Step 4(c) at the job with the biggest paycheck. The IRS does not care which employer sends the money, only that enough arrives during the year.
A bigger one, because self-employment tax comes on top of income tax and nobody withholds either. Estimated payments on the four dates above are the only tool.
Also known as: The Phantom Withholding · Surprise! You Were Underwithheld · Death by a Thousand Paychecks · The “I Thought They Were Taking Taxes Out” Revue
Bring the W-2s, or the pay stubs if it is still this year. We will figure the real number, fix the W-4s and set up a payment plan if needed. In person in Lone Tree or remotely, year round.
This page is general information, current as of October 2026, and is not advice about your situation. Tax law changes every year. Confirm anything that matters to you with us or at the sources below.