99 allowances?

mwild31

[font size="1" color="#FF0000"]LAST EDITED ON 07-13-04 AT 05:22PM (CST)[/font][br][br]Feel kind of x:-8 goofy for asking, but has anyone out there had a new employee state on their W-4:

a. 99 allowances on line 5 (total number of allowances they are claiming), and
b. 10% on line six (additional amount)?

UPDATE: Not sure how to delete, but I got the answer - thanks!

MS HR

what's the answer?
i think i know but would like the benefit of your recent experience.

mwild31

I'll do my best.

In the situation described, the ee was in effect saying on line 5, "don't take out any taxes", or zeroing out the tax as the more allowances you claim, the less taxes you pay out of your paycheck. On line 6 however, the ee in effect is saying, "I've zeroed out my tax obligation, but now I want you to take an additional 10% out of my paycheck and send it to the IRS." Our staff accountant, who's been the business for a long time, remembers this practice from a previous employer that used ADP (but I'm sure others have used/recommended it as well). In my head, the best way to think about the practice is as a short-cut to figuring out how many allowances to have/not have so you don't pay too much/too little to the IRS.

From the Circular E, the IRS states that the amount of income tax withholding must be based on marital status and withholding allowances & that the employees may not base their withholding amounts on a fixed dollar amount or percentage. However, and this is hard to explain, but I'll try and probably be dissected for it, the IRS does not give the employer, in this instance, the express right to "cross examine" the ee on the number of allowances & to overide the number of allowances the ee claimed. This is reserved for the IRS. When an ee claims 10 or more allowances on their W-4, the employer must send along a copy of the ee's W-4 with their next quarterly 941. The IRS then reviews the ee's W-4 and determines if it's acceptable. If it is, then no problem. If it's not, they let the employer and the ee know & then they (IRS) determine what the ee's number of allowances should be. The employer can allow the ee to claim less, but not more than what the IRS set up.

In my case, I gave the information (as well as the IRS website with directions of how to use their W-4 calculator) to the ee to take home & let her husband read (not being sexist here, it's just that he speaks/reads English fluently). They determined not to go through with the added scrutiny by the IRS, used the calculator and came back with Married 4 (works for them I guess). I hope that’s the right answer, cause that’s the one I’m sticking with. x;-)

Pork

NO, I would provide the individual a new form and to show the calculations or entrys on the above section to ascertain how the ee got to the 99. Additionally, the additional amount must be in $ollar amounts not %. A false statement placed on a company form is punishable by termination in our company, those claims shown by you are most likely false unless he/she is from UTAH, then it might be true. Large families can be produced with several spouses legal or not.

Another point is the different lines used in your post. One tells you, the ee does not want you to take any taxes out in accordance with the law; secondly, the ee wants you to take an additional amount out of 10% of what? those two thoughts don't jive!

Interesting question, now what was your answer?

PORK