Tell your Payroll people to circle Feb. 16 as an important to-do date.
That’s the time to change the withholding of any employee who claimed “exempt” on the Form W-4 last year, but didn’t provide an updated form for 2009. Starting Feb. 16, Payroll should begin withholding for these employees at single/zero withholding allowances. “Exempt” W-4s are only good for one year, according to IRS Publication 15.
You may want to do these employees a favor and let them know that this is the last week to submit the form before the company must begin withholding again. If workers provide an updated form after that deadline, say, on March 1, then it’s OK to change their status back to exempt for the next paycheck. And, if Payroll has an earlier, valid W-4 on file, it’s fine to revert to that document as well.
For all you eagle eyes …
Finance staff downloading that new W-4 for employees may notice what seems like an error on Line 4 of the worksheet (“Deductions and Adjustments,” p. 2). The $3,500 listed doesn’t match the 2009 standard deduction of $3,650. IRS confirms this is not an error.
Here’s why: Each year, the Treasury Department tells IRS what number to use. Normally, the amount does reflect the amount for one personal exemption. Over the last 10 or 15 years, a few times it hasn’t, though – and this year is one of those cases.
If employees are having difficulty filling out the form and the instructions aren’t helping, refer them to Publication 919, How Do I Adjust My Tax Withholding?
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