Form W4 FAQ

Federal Income Tax Withholding and Federal Form W-4 FAQ

Can you claim 99 withholdings on a Form W-4?

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 Form 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 Form 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:

  • Publication 505, Tax Withholding and Estimated Tax
  • 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

I would like to overpay my taxes so I get a larger refund. Is there a problem in claiming less exemption on my Form 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:

  • Publication 505, Tax Withholding and Estimated Tax
  • Publication 213 (PDF), Check Your Withholding
  • Form W-4 (PDF), Employee’s Withholding Allowance Certificate
  • Publication 919, How do I Adjust my Withholding

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 Form 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:

  • Publication 15, Circular E, Employer’s Tax Guide
  • Publication 919, Is My Withholding Correct for 2001?
  • Publication 213 (PDF), Check Your Withholding
  • Form W-4 (PDF), Employee’s Withholding Allowance Certificate

Do I put the same number of exemptions on my tax return as I put on my Form W-4?

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:

  • Publication 505, Tax Withholding and Estimated Tax
  • Publication 213 (PDF), Check Your Withholding
  • Form W-4 (PDF), Employee’s Withholding Allowance Certificate

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:

  • Publication 17, Your Federal Income Tax
  • Publication 505, Tax Withholding and Estimated Tax
  • Form W-4 (PDF), Employee’s Withholding Allowance Certificate

I am a full-time college student, can I claim exemption from withholding on my Form W-4?

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:

  • Publication 505, Tax Withholding and Estimated Tax

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 Form 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.

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 Form W-4 is invalid. If an Employee submits a new Form W-4, the employer should start withholding based on that Form W-4 no later than the start of the first Payroll Period ending on or after the 30th day from the day the new Form W-4 is submitted.
References:

  • Publication 505, Tax Withholding and Estimated Tax
  • 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

An Employee may submit a 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 to Publication 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:

  • Publication 970, Tax Benefits for Education
  • Publication 15, Employer’s Tax Guide
  • Form 843 (PDF), Claim for Refund and Request For Abatement

Can an employer take out taxes if a Form W-4 was never filed?

Yes, the employer is required to withhold income taxes. Publication 15, Circular E, Employer’s Tax Guide, states that if an Employee does not give you a completed Form W-4 (PDF), Employee’s Withholding Allowance Certificate, withhold tax as if he or she is single, with no withholding allowances. The employer is also required to withhold Social Security and Medicare taxes.
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

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 F
  • Tax Topic 753, Form W-4 – Employee’s withholding allowance certificate

One of my Employees gave me a Form W-4 claiming exemption from withholding. Do I have to send the Form 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 Form 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 Form W-4. For additional information on Form 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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About The Author...

Charles Read About Charles Read

Charles Read is a former U.S. Marine and combat veteran. He helped convert the joint military unified pay system in 1968 before becoming a Certified Public Accountant and launching a financial industry career spanning 35 years and involving the processing of more than $1 billion in payroll for small businesses across the country. He is the author of the book, “Starting a New Business: A Simple Guide to Financial, Tax and Accounting Consideration.” Charles is a member of the Texas Society of Certified Public Accountants and the American Institute of Certified Public Accountants (AICPA). He is a founding member of the Independent Payroll Processors Association (IPPA).