Final answer:
When married employees have taxes withheld at the higher single rate due to incorrect filing status on Form W-4, they may overpay their taxes and be owed a refund, which is essentially giving the government an interest-free loan.
Step-by-step explanation:
If an employer withholds taxes according to the withholding tables for single employees due to the lack of filing status information on Form W-4, this means that married employees may have more taxes withheld from their paycheck than necessary. This is because the tax rates and standard deductions are different for single filers compared to those who are married filing jointly. The withholding tables for single taxpayers generally assume a higher tax rate because they do not account for the benefits associated with filing jointly, such as a lower tax rate on a larger amount of income and a higher standard deduction.
At the end of the tax year, these married employees may find that they have overpaid their taxes and are therefore due a tax refund. While receiving a refund after filing a tax return may seem beneficial, it also means that the employees have essentially extended an interest-free loan to the government throughout the year. It is important for employees to fill out Form W-4 accurately to ensure the correct amount of tax is being withheld, matching their actual tax liability as closely as possible.