Revisions to Employee W-4 Forms - March 25, 2004

This is the time of year when employees revisit their withholdings and ask to revise their W-4 allowances. It is beneficial for an employee to update withholding information when the need arises. Common examples of a tax status change might be for the following reasons:

• Marriage/divorce,

• Added or lost dependents,

• Interest deduction from the purchase of a home,

• Secondary income which does not withhold, such as a part-time job (including that of a spouse), royalties, investment income or gambling winnings/losses.

Employers are not responsible to verify the number of allowances claimed, but there are two situations where an employer must send the IRS copies of questionable withholding certificates:

1. If an employee claims over 10 withholding allowances,

2. If an employee claims exempt and the employer believes the employee usually earns more than $200 per week.

If the employer finds these questionable items they should still submit the employee revised W-4 to the IRS in their quarterly return, and withhold based on the revised W-4 until notified by the IRS to change the withholding.

If an employee edits Form W-4 by crossing out any of the pre-printed wording or by adding any wording, and the employer discovers it, they need to invalidate the form and revert back to the information contained in the W-4 form filled out by the employee. An employer should not knowingly use an invalid Form W-4 to calculate withholding. If the employee refuses to fill out a new form, they should revert back to the original W-4 filled out by the employee, or if it is a new employee, withhold as if the individual were single with no withholding exemptions. An employee who files a false Form W-4 may be subject to a $500 penalty by the IRS.

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