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W4 - employer responsibility when employees claim exempt and withholdings

I’m in a small professional debate at work about our responsibility as an employer when an employee fills out their W4 (or state) tax form(s) claiming withholdings AND exempt. I am having difficulty finding clear and direct language (especially on the new 2018 W4) that states the employers obligation. I’m under the impression if it is ambiguous as to whether the employee is claiming exempt, or claiming a martial status and withholding that we as an employer are obligated to set them up at single claiming 0 withholdings. My colleagues are not convinced and I don’t wish to mislead if I’m wrong. Any assistance, especially siting government references regarding this are greatly appreciated.


  • rrupertrrupert ✭✭✭
    edited June 2018

    Best business practice with an ambiguous/invalid form (if you have time before the next payroll) is to reject the form as invalid. If one is not received prior to payroll processing, then yes you would withhold at S0 (federally at least).

    To me the explanation is clear in Paragraph 6 of the left column of instructions on the 2018 W-4 "If you’re exempt, complete only lines 1, 2,3, 4, and 7 and sign the form to validate it." It 's kind of implied that filled out other lines would invalidate it since it says ONLY -- which rules out 5 and 6

  • Agree with rrupert - Entries on lines 5 and 6 in that case would be "unauthorized" and would make the form invalid. The problem is that you don't know what the employee intended - that is, the employee gave you instructions as to how much to withhold at the same time telling you not to withhold.

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