Employees don’t always take the task of filling out their W-4 forms seriously. They may write “exempt” on the withholding portion of the form, or even claim a false high number of withholding allowances to ensure that no federal or state tax is withheld.
When Employees Ask Your Advice
According to the IRS, a W-4 form is invalid if any unauthorized addition or change is made to it, or if the employee indicates in any way that the information on the form is false.
1. Did the employee have a tax liability in the previous year? If the employee received a refund of all federal income tax paid (or had a right to a refund), he or she may be able to claim exempt, depending on the answer to the next question.
2. Does the employee expect to have a tax liability this year? To determine the answer, ask these questions:
a. Can the employee be claimed on someone else’s income tax return this year (such as a parent)?
b. Will the employee’s income for 2013 exceed $1,000 and include more than $350 in unearned income (such as interest or dividends)? If the answers to both a and b are yes, the employee may have a tax liability for the year, and cannot claim to be exempt from