Purpose of the Form W-4:
This form calculate how much federal income tax to withhold
from your employee’s wages. Form W-4 tells you, as an employer,
the martial status, the number of withholding allowances, and
any additional amount to use when you deduct Federal income
tax from the employee’s pay.
Minimum Requirements:
All new employees must complete Form W-4 on their first day of
work. If your employee does not fill out a Form W-4, you must
withhold taxes as if the employee were single with no withholding
allowances.
Effective Dates:
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A W-4 remains in effect until an employee completes a new
one.
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A new W-4 may be completed any time any employee’s tax
situation changes (marriage, divorce, birth of child, etc.) or if
the employee chooses to have less or additional taxes
withheld.
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If an employee completes a new W-4 that replaces an existing
W-4, you must begin the new withholding now later than the
first payroll period ending on or after the 30th day from the
date you received the revised form.
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Employees who claim exemption from income tax
withholding must complete a new W-4 every year.
IRS Review:
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You are required to keep a Form W-4 on file for each employee for at
least four years after the date the employment tax becomes due or is
paid (whichever is later).
When requested, you must make original Forms W-4 to the IRS
available for inspection by and IRS employee. You also may be
asked to send copies of certain Forms W-4 to the IRS.
After submitting a copy of Form W-4 to the IRS, you should continue
to withhold federal income tax based on the Form W-4.
However if the IRS later notifies you in writing that the employee is
not entitled to claim exemption from withholding or a claimed
number of withholding allowances, then you should modify the
withholding based on the effective date of the letter and maximum of
withholding allowances specified in the letter. .
Enforcement:
The IRS enforces federal tax laws. The IRS can assess back taxes and
penalties for not withholding payroll taxes.
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Under IRS regulations, a W-4 is invalid if any of the required
information is missing and/or a signature is not provided. In
addition, a W-4 is invalid if the official languages on the form
is deleted or altered.
A W-4 is also invalid if an employee indicates in any way that
it is fake.
You may treat a W-4 as invalid if the employee wrote
“exempt” on line 7 and also entered a number on line 5 or
amount on line 6.
Never use an invalid W-4 to calculate withholding. Instead,
request a new form from your employee.
If the employee does not provide a valid form, you should
withhold taxes as if the employee were single and claiming no
withholding allowances. The only exception is if you have a
previous W-4 in effect for the employee. If that’s the case, you
should continue to withhold in accordance with the previous
form.
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The Personal Allowance Worksheet is used by the employee
to calculate allowances, which will be entered in the
Employee’s Withholding Allowance Certificate.
This section should be kept by the employee for their own
records.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Employee’s first name and middle initial, last name, home address, city, state, and
zip code.
Social Security Number
Marital status
Employee will check this box if employee’s last name differs from that shown on
employee’s social security card.
Total number of allowances employee is claiming if applicable.
Additional amount (a fix dollar amount) that employee would like to have withheld
from paycheck.
If employee is claiming exceptions from withholding for 2012, and employee meets
both conditions, employee will write “Exempt.”
Employer’s name and address
Office code (optional)
Employer’s identification number (EIN)
Employee’s signature and date (this form is not valid unless employee signs).
Sample of an employee with allowances:
Sample of an employee with no allowances:
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Any foreign employee will be considered a U.S. resident for TAX
PURPOSES ONLY if they meet the substantial presence test for the
calendar year.
To meet this test, employee must be physically present in the U.S. on at
least:
1.
31 days during the current year, and
2.
183 days during the 3-year period that includes the current year and
the 2 years immediately before that counting.
o All the day you were present in the current year, and
o 1/3 of the days you were present in the first you before the
current year, and
o 1/6 of the days you were present in the second year before the
current year.
o
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Example: Employee was physically present in the United States on 120 days in
each of the y0ears 2007, 2008, and 2009. To determine if this employee meets the
substantial presence test for 2009, count the full 120 days of presence in 2009, 40
days in 2008 (1/3 of 120), and 20 days in 2007 (1/6 of 120). Since the total for the 3year period is 180 days, the employee is not considered a resident under the
substantial presence test for 2009.
Applies to H2B workers that have worked for 3 consecutive seasons, and
have been physically present in the U.S. for 183 days during the current
year and the 2 previous years.
Days of Presences in the United States
An individual is treated as present in the U.S. on day they are physically
present in the country, at anytime during the day. However, there are
exceptions to this rule. Do not count the following as days of presences
in the U.S. for the substantial presence test:
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Days an individual commutes to work in the United States from a
residence in Canada and Mexico, if they regularly commute from
Canada and Mexico.
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Days an individual is in the United States for less than 24 hours,
when they are in transit between two places outside the United
States.
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Days an individual is in the United States as a crew member of a
foreign vessel.
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Day an individual is unable to leave the United States because of a
medical condition that develop while they are in the United States.
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Days an individual is an exempt individual
Exempt Individuals
Do not count days for which someone is an exempt individual. There “exempt
individual” does not refer to someone exempt from U.S. tax, but to anyone in
the following categories who is exempt form counting days of presence in the
U.S.:
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An individual temporarily present in the United States as a foreign
government-related individual.
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A teacher or trainee temporarily present in the United States under a “J”
or “Q” visa.
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A student how is temporarily present in the United States under a “F,” “J,”
“M,” or “Q” visa
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Professional athletes.
Information used was provided by the IRS, and was
obtained from the following sources: Instruction on
W-4, Notice 1392: SupplementalW-4 Instructions for
Nonresident Aliens, Publication 15 (Circular E)
Employer’s Tax Guide, and the IRS’ website at
www.irs.gov.
If you have any further questions you can contact us:
Phone: 956-748-0550
Email: [email protected]