Tax withholdings

perplexed

We have apparently had situations where employees have decided to not have their taxes withheld from their paychecks periodically. Our managers just told the payroll clerk to stop their taxes and they would tell them when to restart them.

I was nervous because there was no paperwork or signatures to cover these instances. Just a note in the payroll clerk's file folder. I have now started having managers and employees fill out a new W-4 and G-4 when they want this non-deduction is to take place. When they want the taxes to resume, they have to fill out another form.

It has cut down on the number of managers and employees that have decided to do this but has increased the amount of grumbling. (I can put up with the grumbling, I've raised two children!)I just want to make sure I am handling this in the right way and there are no laws being broken.

NeedCoffee

In Texas we don't have state income taxes, so I'm not sure on the state level, but the W-4 can be changed as many times per year as the employee wishes. Your obligation is to retain copies of the W-4s and ensure they are filled out correctly.

Nuisance, yes, but legal.

HRQ

You are obligated to report to the IRS when an employee claims more than 10 dependents on their W-4, but I don't believe this applies to someone who simply claims "exempt". Wish I could find the article, I'd give you the exact language.

Definitely continue requiring completed W-4's before making payroll changes. They'll get used to it eventually, and will also probably stop making changes so often!

Also make sure the payroll clerk isn't accepting any other changes verbally - like pay increase/decreases, timecard changes, etc. Nothing in payroll should happen without signed documentation from the employee or supervisor.

FunHRBanker

[font size="1" color="#FF0000"]LAST EDITED ON 11-03-06 AT 11:09AM (CST)[/font][br][br]We had one employee claim exempt on their W-4. You are required to mail in a copy of the W-4 with your 4th quarter tax filings for anyone who has claimed exempt and it must be "recertified" annually.

There was one year that the IRS mailed back a form stating that the employee did not qualify and we had to withhold at a certain rate until notified otherwise.