Federal and State (CA) Income Tax Withholding

SlidecklySlideckly Member Posts: 5

Greetings Wavers! Happy New Year! I hope your 2019 is going well so far.

I have a question regarding employee Federal and State (CA) income tax withholding

Effective January 1, 2019 - my LLC has elected to be taxed as an S Corp. This year, I have an employee (which is me!). I've decided to use Payroll by Wave in order to take care of all the Payroll Taxes, etc. Recently, I've already ran two (2) payrolls (I have a twice-a-month schedule for my payroll). I noticed that both payrolls are not withholding any Federal or State (CA) income taxes. They are currently at $0.00. Any reason why it's not withholding any amount at all? Currently, my rate for these income taxes should be at 10% for Federal Income Tax Withholding and 1% fo State (CA) Income Tax Withholding.

My question then is this: How come Wave is not withholding any income taxes when I run and approve my payroll? How does it work? Is this normal? If it's not withholding any income tax, do I need to do it manually?

Let me know if you need further details with my situation.

Thank you in advance Wavers!

Mike Macasero


  • CloudkickerCloudkicker Member Posts: 2

    I notice the same thing in my payroll and have held payroll until I figure it out. Any suggestions?

    Thank you for the assistance.

  • SlidecklySlideckly Member Posts: 5

    I know right, Cliff? I'm at a loss too. Hopefully, official Wave folks will/can reply to this soon.

  • JamieDJamieD Administrator Posts: 1,145 admin

    @Mike_from_Slideckly It appears that we are, in fact making the withholding payments for you. Since you ran two Payrolls that had check dates in January, the first withholding payment to the IRS is the 15th of February (today) - With that said, the amounts will be taken out of your account on those specific payment dates (not on the pay period itself). You can always find this information if you go to your Payroll > Taxes tab in Wave -- it will show you the liabilities due for taxes.

    @Cloudkicker Your business is based in a state that we don't offer tax services in. That said, we will still calculate the withholding amounts based on the information you entered in your Tax Profile (again under Payroll > Taxes you will find this) and you can manually pay the IRS/state with this info. Again, since the check date is in February you will see the withholding amounts due for March (the IRS goes by check date in terms of remittance payments).

  • CloudkickerCloudkicker Member Posts: 2

    So it took me a while but I finally figured it out and it was confirmed by an email to support. It appears at the salary rate that I am paying my employee (me) and the number of deductions I am claiming there is a small state withholding amount but no withholding for Federal. The state withholding only showed up when I lowered the number of deductions. I also tested by deleting the employee add him back in with an amazing salary and was able to verify that Federal and state were indeed calculating. I deleted the employee readded it with the right salary then less deductions and the state had a withholding amount but not the federal. When support got back to me she directed me to the Federal withholding pamphlet that verified no withholding for that salary range. Yeah it was working all along. :smiley:

    Thank you for everyones input.

    PS - When I posted here MikeG contacted me about using a different software called Patriot. If I wanted to be marketed I would have went to Google.

  • SlidecklySlideckly Member Posts: 5

    Thanks @JamieD. I appreciate you explaining that. It makes sense. Also, about a week ago or so, another Wave rep (via chat support - responding via email) that Wave wasn't withholding any Federal and State taxes because I (the employee) had identified myself as exempt.

    That rang a bell to me! I know exempt employees have to take care of Fed/State taxes on their own (not the employer - again me), which means no Fed/State are withheld by the employer. It is the employee's responsibility to pay those.

    So, in this case, upon reviewing the rule around exempt employees, I had to uncheck myself as an employee since technically I didn't qualify. So, in January... I had to pay my Fed/State taxes directly to the right agencies (I like to pay my taxes on a monthly basis due to habit). But starting with my February payroll taxes, Fed/State are now being withheld by Wave because the employee is now NOT an exempt employee.

    In summary, I'm good to go! Wave is working great for me.

    Thanks again @JamieD

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