When should employers reject form W-4?
Sally Thomson CPP, director of payroll training for the American Payroll Association, discusses when employers should reject this form and provides an update on changes
I magine this scenario: an employee submits form W-4, employee’s withholding allowance certificate, to the payroll department claiming to be married with 99 withholding allowances. Should the payroll department refuse the form? As a payroll professional, understand that it is not the responsibility of the payroll department to verify the accuracy of the information on the form. We do not determine if an employee qualifies as exempt from withholding or if the number of allowances claimed is accurate. It is, however, the responsibility of payroll to ensure the form has been completed in its entirety. We should consider if the employee completed the following: ● box 1: name and address ● box 2: social security number ● box 3: marital status for withholding purposes ● box 4: last name if it differs from the social security card (optional) ● box 5: number of allowances (this box should remain blank if claiming exempt) ● box 6: additional amount withheld (optional). Now, check to make sure the employee signed and dated the form. Also, check to see if the form has been altered in any way. If so, the employer should refuse to accept the invalid form. Alterations include striking through any language on the form or any unauthorized additions to the form. If the employee makes a mistake when completing the form, they cannot cross through the error and provide the correct information. If an error is made in form W-4, the employee must complete a new form. Strikethroughs with the correct information inserted are not allowed, even if the correction is initialed and dated. Some common mistakes we see in paper forms W-4 are conflicting information or missing information. If your payroll system has employee self-service (ESS),
you’ll want to encourage all employees to submit their form W-4 electronically, as ESS will not let employees submit an invalid or an incomplete form. ...responsibility of payroll to ensure the form has been completed in its entirety... For example, if an employee claims allowances on line five and writes “exempt” on line seven, most systems will not let the employee submit the form as the form contains conflicting information. In this case, the form is telling the employer to calculate income tax withholding based on the allowances, yet not to withhold any income tax because the employee is not subject to withholding. Therefore, the form is invalid. So, should the payroll department refuse a W-4 with 99 withholding allowances? If the employee has completed the required boxes and not indicated the form is false in any way, then payroll should accept the form and verify the information is correctly updated in the payroll system. If the IRS determines the employee is not having adequate income tax withheld, it may send the employer a lock-in letter, specifying the marital status and maximum number of withholding allowances permitted for the employee. The employer must withhold federal income tax according to the letter. The employee may not claim more withholding allowances or claim exempt while the lock-in letter is in effect. The IRS released a second draft of the 2019 form W-4 in October 2017. The latest draft is very similar to the 2018 form W-4 with a few non-substantive language changes in the general instructions. In several sections of the new draft,
the IRS has added language clarifying that employees should take into account non- wage income ‘not subject to withholding’ in using the various worksheets and that the child tax credit may be taken only for children who have a valid social security number. The IRS has announced it will delay major revisions to form W-4 until the 2020 version. Therefore, the latest 2019 form draft is very similar to the final 2018 version. The IRS decided to delay the changes to the 2019 form W-4 “following feedback from the payroll and tax communities.” o This article was published in the April 2018 issue of the American Payroll Association’s PayTech magazine. The APA, www.americanpayroll.org, is the USA’s leader in payroll education, publications, and training. This nonprofit association conducts more than 300 payroll training conferences and seminars across the country each year and publishes a complete library of resource texts and newsletters. Representing more than 21,000 members, APA is the industry’s highly respected and collective voice in Washington, D.C. The Global Payroll Management Institute (GPMI), www.GPMInstitute.com, spearheads the APA’s global initiatives to provide the world with a leading community of payroll leaders, managers, practitioners, researchers, and technology experts. Subscribers connect with each other through networking discussions, collaborative opportunities, and access to education and publications dedicated to global payroll strategies, knowledge, research, employment, and training. GPMI also publishes several global payroll texts and white papers as a benefit to subscribers.
| Professional in Payroll, Pensions and Reward | December 2018 / January 2019 | Issue 46 48
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