As it’s the end of tax time and employees may be re-thinking about how much of a deduction they should be making, if their refund was much lower in years past, there are certain key aspects that employers need to be aware of before saying what they can and cannot do with that W-4 form, including themselves.
1. Can I make the changes via telephone or e-mail?
That is an incorrect assumption that many people have, and it can lead to severe issues and penalties should you choose to attempt to go that route. You must have an official IRS W-4 form, which is available at www.irs.gov, or you also have the option of having a substitute form, only if you also submit that calendar year’s W-4 tables and instructional information. If they choose not to complete it, then DO NOT make any changes until you have it.
2. Is there a time line on how long it remains in effect?
Unless an employee submits a new one, what you have on file, regardless of the age of its existence, stays in effect. Ideally you should be requesting a new form at the beginning of each year, and if an employee claims EXEMPT on their form, then that must be submitted by no later than February 15th. Due to the addition/elimination of allowances such as children, marriage, divorce, etc. it’s important that each employee be given the opportunity to file a new form. Also, if you are completing a new form, you should always use the form that is labeled for that current calendar year.
3. How much can be taken out?
The tax table cannot be altered regarding Federal Withholding, however an employee has the right to take out an additional amount of their own choosing or lower it if they’ve already had funds above and beyond the standard rate. If you are looking to take out an additional flat percentage instead of an actual dollar amount, check with your payroll software to determine if this is a viable option.
4. How many times can a W-4 be changed?
The form can be submitted as often as an employee chooses. However, it can only be enforced for the first payroll period ending on or after the 30th day from the time you received it. Therefore, this limits the amount of submissions you accept.
5. Do I have to accept the W-4 form if it looks incorrect?
You do not have legal authority to determine how many allowances or how an employee completes it. You must, however, go through the form and help answer any questions they may have as it relates to the form itself, but offer no advice. As required, you are not obligated to submit it to the IRS unless an employee submits 10 or more allowances. In that instance, you may explain to the employee at that time of your obligations. If you are aware though that the W-4 form is considered invalid for a brand new employee, you are required to withhold at zero allowances and a single rate. Until that employee completes a correct form with no missing information and/or signature, you can then utilize their updated form.
About Our Show Advisor: Dwayne Briscoe is the founder and owner of Bookkeeping-Results, LLC. Dwayne began his company in January 2007, based on the foundation to educate small business owners and bookkeepers who use QuickBooks®. Working as a full-charge bookkeeper and trainer in a variety of industries for over 15+ years, he is a certified Pro Advisor with 5 certifications, including Enterprise Solutions and Point of Sale. He is also an instructor at Brazosport College in Lake Jackson, where he teaches basic accounting, QuickBooks®, and basic payroll, along with hosting his own private classes.
Bookkeeping-Results, LLC has focused more on quality and not quantity for their clients, by paying attention to the details. Through regular continuing education participation, as well as exploring additional ways of “thinking outside of the box” to help expand people’s knowledge of their own financial well being, it’s important to focus on not only saving the client money but also making the client money.