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Frequently Asked Tax Questions And Answers
Keyword: Withholding Allowances (Form W-4)
1.16 IRS Procedures: W–4 - Allowances, Excess FICA, Students, Withholding
Can you claim 99 withholdings on a W-4 form?
You can claim the number of withholding allowances that you are entitled
to based on the Form W-4 (PDF), Employee's Withholding
Allowance Certificate, worksheets. You can claim less than you are entitled,
but not more. You may not arbitrarily pick a number with the goal of avoiding
income tax withholding. The law provides for a civil penalty of $500 for filing
a false statement on Form W-4.
If at the time the Form W-4 is submitted, the employee has made any statement
indicating that the W-4 is false in any way, it is invalid. The employer would
then be required to treat the submitted form as invalid and withhold as if
the employee were single claiming no allowances.
Employers are required to submit any Forms W-4 with more than 10 allowances
claimed to the service center's Form W-4 coordinator. The W-4 coordinator
will review the employee's most recent tax returns and make a determination
as to whether to notify the employer to withhold based on a lesser number
of allowances.
References:
I would like to overpay my taxes so I get a larger refund. Is there
a problem in claiming less exemptions on my W-4 than are shown when I use
the Personal Allowance Worksheet?
You may claim fewer allowances than you are entitled to claim, but you
may not claim more than you are entitled to claim. If you only complete the
Personal Allowance Worksheet on the front of Form W-4 (PDF), Employee's Withholding Allowance Certificate, you may
not have accurately determined the number of allowances you are entitled to
claim. There are more worksheets (the Deductions and Adjustments Worksheet
and the Two-Earner/Two Job Worksheet) on the back of Form W-4. Complete all
applicable worksheets to determine the number of allowances you can claim.
References:
Is there a table available where I can calculate how much will actually
be withheld from my paycheck when I make a change on my W-4?
Yes, there is. It is the same table, or tables, that employers use to
determine how much to withhold based on the Form W-4 (PDF), Employee's
Withholding Allowance Certificate. In Publication 15, Circular
E, Employer's Tax Guide, there are two sets of income tax withholding
tables: the Percentage Method Tables and the Wage Bracket Method Tables. The
wage bracket method is probably the most commonly used method. There are separate
tables under each method based on marital status and payroll period. These
tables are not to be used to decide how many allowances should be claimed.
References:
Do I put the same number of exemptions on my tax return as I put
on my W-4 form?
What you put on your Form W-4 (PDF), Employee's
Withholding Allowance Certificate, are withholding allowances, not exemptions.
An exemption is allowed on your tax return for yourself, your spouse (if married
filing jointly), and qualifying dependents (if you are an U.S. citizen or
resident alien). Each exemption merits a withholding allowance on the Form
W-4 Personal Allowance Worksheet.
However, there are two more worksheets that may affect the final number
of allowances, and under some circumstances, you get more allowances than
you have exemptions. Some things that will be on your tax return, such as
itemized deductions, tax credits, and losses add allowances to the total number
of allowances. Some circumstances reduce the number of allowances, such as
non-wage income, having two jobs, or having two earners in the family. For
a more detailed discussion of withholding allowances, refer to Publication 505, Tax
Withholding and Estimated Tax.
References:
As a full-time student, am I exempt from federal taxes?
Every U.S. citizen or resident must file a U.S. income tax return if certain
income levels are reached. There is no exemption from tax for full-time students.
If you are a full-time student, you may not be working full time. Factors
that determine whether you have an income tax filing requirement include:
the amount of your income (earned and unearned),
whether you are able to be claimed as a dependent,
your filing status, and
your age.
If your income is below the filing requirement for your age, filing status,
and dependency status, you will not owe income tax on the income and will
not have to file a tax return. You may choose to file if you have withholding
that you would like refunded to you.
You may have given your employer a Form W-4 (PDF), Employee's
Withholding Allowance Certificate, claiming exemption from withholding.
To claim exemption from withholding, you generally would have to have had
no tax liability the previous year and expect none in the current year. An
exemption certificate is good for the calendar year.
References:
I am a full-time college student, can I claim exemption from withholding
on my W-4 form?
You are not automatically exempt from federal income tax withholding because
you are a full-time student. To claim exemption from withholding, the following
two statements must be true:
For the previous year, you had a right to a refund of ALL Federal income
tax withheld because you had no tax liability, and
For the current year, you expect a refund of all Federal income tax withheld
because you expect to have no tax liability.
References:
What can be done if an employer will not withhold income taxes,
social security, and Medicare from my pay?
Generally, in situations such as this, the employer is not considering
you to be an employee. Rather, you are being treated as an independent contractor
(self-employed person). If you cannot resolve this matter with your employer,
and if you feel that an employer-employee relationship exists, you should
submit a Form SS-8 (PDF), Determination of
Employee Work Status for Purposes of Federal Employment Taxes and Income Tax
Withholding. The factors used to determine if an employer-employee relationship
exists are covered in Chapter 2 of Publication 15-A (PDF), Employer's Supplemental Tax Guide.
If your status as an employee is not at issue, it may be that you are in
a category of employment whose earnings are not defined as wages under U.S.
social security law. Find out from your employer the reason that social security
and Medicare taxes are not being withheld from your pay. If you have further
questions, contact the IRS at 800-829-1040 or visit an IRS walk-in office
for assistance.
References:
- Form SS-8 (PDF) , Determination
of Employee Work Status for Purposes of Federal Employment Taxes and Income
Tax Withholding
- Publication 15-A (PDF) , Employer's
Supplemental Tax Guide
- Publication 1779 (PDF) , Independent
Contractor or Employee
Can an employer take out taxes if a W-4 was never filed?
Yes, an employer can. Employers should ask all employees to submit a signed Form W-4 (PDF), Employee's Withholding Allowance Certificate,
when they start work. It should be effective the first pay period. If the
employee does not submit a Form W-4, the employer should withhold as if the
employee were single claiming no allowances.
An employee may submit a Form W-4 at any time. The employer should base
the employee's income tax withholding on the most recently submitted Form
W-4, unless the IRS has notified the employer to withhold based on a different
number of allowances, or unless the W-4 is invalid. If an employee submits
a new Form W-4, the employer should start withholding based on that W-4 no
later than the start of the first payroll period ending on or after the 30th
day from the day the new W-4 is submitted.
References:
I am a graduate student and serve as a teaching assistant. I would
like to know whether FICA taxes need to be withheld from my paychecks?
Students who perform services for the school, college, or university where
they are enrolled and regularly attend classes are usually not subject to
social security and Medicare taxes.
If the student works for a public school, college or university which is
subject to a section 218 agreement, the student's services are automatically
subject to social security and Medicare taxes if the state has chosen to cover
students under its section 218 agreement with the Social Security Administration.
The employer can tell you whether its students' services are subject to social
security and Medicare taxes under a section 218 agreement.
References:
- Publication 15, Circular E, Employer's Tax Guide
- Federal Regulation section 31.3121(b)(10)-1
As I understand the law, student stipends are exempt from FICA and
Medicare taxes. If my university takes these taxes out of my stipend income,
can these taxes be recovered in some way?
If you are not performing a service for the university, your stipend would
be subject to income tax only if it does not meet the qualified scholarship
rules. Please refer toPublication 970 Tax Benefits for
Education, for information on when a stipend would be a qualified scholarship,
which would not be subject to social security and Medicare taxes. If you are
performing a service for the university, your income is taxable for income
tax purposes, but would generally be exempt from social security and Medicare
taxes if you are enrolled and regularly attending classes unless you are covered
under a section 218 agreement. Refer to Publication 15, Employer's
Tax Guide.
If your employer has been withholding social security and Medicare taxes
from your stipend, the employer should refund the withheld tax. If the employer
refuses to do so, Form 843 (PDF), Claim For
Refund and Request For Abatement, can be filed to claim credit for the
incorrectly withheld tax.
References:
12.4 Small Business/Self-Employed/Other Business : Form W–4 & Wage Withholding
If an employee claims more than 10 exemptions on their Form W-4, does the
employer have to report this to the IRS?
Yes, if you receive a Form W-4 (PDF), Employee's Withholding
Allowance Certificate, on which the employee claims more than 10 withholding
allowances, you must send a copy of that Form W-4 to the IRS service center with your
next employment tax return.
Also, if an employee claims exemption from withholding and his or her wages would
normally be expected to exceed $200 or more a week, you must also send a copy of that
Form W-4 to the service center with your next employment tax return.
If you want to submit the Form W-4 earlier, you can send a copy of the Form W-4
to the IRS with a cover letter, including your name, address, employer identification
number, and the number of forms included. The service center will send you further
instructions if it determines that you should not honor the Form W-4.
References:
- Form W-4 (PDF), Employee's Withholding Allowance Certificate
- Tax Topic 753, Form W-4 - employee's withholding allowance certificate
One of my employees gave me a W-4 form claiming exemption from withholding.
Do I have to send the W-4 to the IRS?
If you receive a Form W-4 (PDF) on which an employee claims:
exemption from withholding and his or her wages would normally be expected to
exceed $200 or more a week, or
more than 10 withholding allowances,
you must send a copy of that W-4 to the IRS service center with your next Form 941 (PDF) return or with a cover letter that includes yours
name, address, EIN, and number of forms included. The IRS will send you further instructions
if it is determined that you should not honor the Form W-4. For additional information
on Form W-4, refer to Tax Topic 753 and/or Publication 15, Circular E,
Employer's Tax Guide.
References:
- Publication 15, Circular E, Employer's Tax Guide
- Form W-4 (PDF), Employee's Withholding
Allowance Certificate
- Form 941 (PDF), Employer's Quarterly
Federal Tax Return
- Tax Topic 753, Form W-4 - employee's withholding allowance
certificate
If we received a Form W-4 with a blank in the number of withholding exemptions.
How should we handle this?
This should be treated as claiming zero withholding allowances. If the employee
has completed the remainder of and signed the Form W-4 (PDF), Employee's
Withholding Allowance Certificate, and indicated that he or she is single or
married, withhold from the single or married table as indicated on the employee's
form with zero withholding allowances. If the employee has not indicated that he or
she is single or married, or if the employee has not signed the Form W-4 and otherwise
completed the Form W-4, withhold as if he or she is single with zero withholding allowances.
References:
- Publication 15, Circular E, Employer's Tax Guide
- Form W-4 (PDF), Employee's Withholding
Allowance Certificate
- Tax Topic 753, Form W-4 - employee's withholding allowance
certificate
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