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Exempt or Non-exempt... that is today's question.

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This is a blog about REAL questions with REAL answers from REAL people for REAL business owners and professionals.  How many times have you had questions about payroll or just business or tax questions in general, but couldn't figure out exactly what to ask or who to ask it to?  I hope it's comforting to know you're not the only one this happens to!  I felt the same way in the beginning, many  years ago.  It's actually what drove me to this profession in 1984!  Now, after decades of helping thousands of people, just like you, I'm writing this blog to help YOU!  So dig in - see if some of our questions and answers put words to your thoughts.  We're here to help - so reach out to us with your every-day challenges and we'll create a post just for you!

REAL questions with

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REAL people for

REAL business owners

My employee wrote ‘Exempt’ on their W-4. Is this correct? -l.b.

The IRS says that if an employee qualifies, he or she can also use Form W-4 to tell an employer not to deduct any federal income tax from his or her wages. To qualify for this exempt status, the employee must have had 1) no tax liability for the previous year and 2) must expect to have no tax liability for the current year. (However, if the employee can be claimed as a dependent on a parent's or another person's tax return, additional limitations may apply; refer to the instructions for Form W-4.) 

 

In addition, a Form W-4 claiming exemption from withholding is valid for only the calendar year in which it's filed with the employer. To continue to be exempt from withholding in the next year, an employee must give you a new Form W-4 claiming exempt status by February 15 of that year. If the employee doesn't give you a new Form W-4 you will either withhold tax as if he or she is single, with no withholding allowances or, if you have an earlier Form W-4 (not claiming exempt status) for this employee that's valid, withhold as you did before.

 

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Published on:

October 23, 2018

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