Updated: February 28, 2025
Have you ever seen the word “blocked” on a paycheck and wondered what it means? This term can confuse employees, employers, and even some payroll professionals. A federal tax block impacts tax withholding and can lead to an unexpected tax payment or even penalties.
In this employer’s guide, we’ll help you to know what a tax block is, common reasons why this can happen, and the steps you can take to prevent it from becoming an issue in the first place.
If your employees see the word “blocked” on their pay stubs, it means their federal income tax withholding has been stopped or paused. In other words, no federal income tax is being deducted from their paycheck.
As an employer, you deduct money from your employees’ paychecks. This is called federal withholding and refers to the amount of money you send to the federal government in an employee’s name. Employers also collect other types of employment taxes, such as Social Security and Medicare taxes and federal unemployment taxes.
The purpose of withholding is to pay tax on your income as you earn it rather than all at once. Nothing is worse than getting a huge tax bill during tax season and not having the funds to pay it. Withholdings reduce the risk of non-compliance and provide consistent revenue to the government. The withholding amount depends on the taxable wages and the information an employee puts on their W-4 form (Employee’s Withholding Certificate).
When employees fill out this form, they provide details like their tax filing status, the number of their dependents, and whether they want additional tax deductions. Employers use this information to determine how much federal income tax they will deduct from their paychecks.
Now that we better understand what “tax blocked” refers to, let’s find out more about what can cause it.
A federal tax block on an employee’s paycheck can happen for various reasons. It is essential to address these issues promptly to avoid unexpected tax liabilities. Here are the most common reasons:
Errors on a W-4 can lead to a federal tax block. For instance, if an employee claims too many exemptions, makes a mistake with their withholding allowances, or doesn’t fill out the form correctly, it may result in withholding issues.
Sometimes human error plays a part, leading to the blocked status, such as incorrect data entry or payroll processing mistakes.
In some cases, certain employees may be exempt from federal withholding if they have no tax liability for the previous and current years. However, this must be validated in their W-4 every year.
A “tax blocked” status usually appears in the federal income tax section, where you typically see the detailed tax deductions taken out of a paycheck. If an employee’s salary or payroll deductions haven’t changed but their paycheck suddenly increases, it may be a sign of a federal block.
Blocked withholdings can lead to less-than-ideal tax issues and even attention from Uncle Sam. An employee might get a large, unexpected tax bill or a penalty if an employer doesn’t withhold enough money.
Here are some steps you can take to avoid issues with federal tax withholding:
Be sure that your employees complete their Form W-4 correctly and that it contains accurate information, such as the number of exemptions. Make sure they are regularly updated if their employment status or personal circumstances change. It can be a good idea to have them double-check their W-4 form, and if they have any questions or are unsure if they have filled it out correctly, have them reach out to a tax professional or your company’s HR department. Keep in mind that you cannot direct an employee on how to fill out their Form W-4, but you can alert them to potential errors and allow them to fix them if they choose to.
Have your employees check their pay stubs regularly and verify that federal taxes are withheld correctly from each paycheck. The best time to check their withholding is at the beginning of the year, every time the tax laws change, and when they have major life changes.
If you or your employees see any mistakes, contact them and have them talk to payroll or the HR department to fix any discrepancies as soon as possible. Sometimes, a slight change can fix a federal tax block.
Here are the steps to take if you see a federal tax blocked on an employee’s paycheck.
The first step should be to contact your payroll or HR department. Staff can review the employee W-4 form and payroll records to identify issues and suggest possible corrections.
Most tax professionals can provide guidance on correcting withholding errors and minimizing potential penalties.
Familiarize yourself with IRS requirements for withholdings to ensure your employees comply with tax laws.
Understanding what “tax blocked” means on your employees’ paychecks is important, especially if you want them to avoid unexpected liabilities or penalties during tax time. If you’re a business owner unsure of how to calculate payroll taxes, or need help with simplifying HR to-dos or setting up employee benefits, there are software programs that can help automate most of the heavy lifting.
OnPay’s award-winning payroll software platform can simplify payroll management, ensure accurate tax withholdings, and streamline payroll processes, giving you peace of mind. If you have any questions or need a hand, our team can help!
Take a tour to see how easy payroll can be.
Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.
This means no federal income tax is being withheld from your paycheck, potentially leading to tax liabilities or penalties.
To unblock taxes, check your Form W-4 for mistakes, consult with HR for payroll errors, and if necessary, seek advice from tax professionals. You can also contact the IRS or file a new Form W-4 to correct any errors.
Yes, but it depends on your overall tax situation. If you have other credits and deductions, you may qualify for a refund.
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