How to File Exempt on W4
The Internal Revenue Service (IRS) requires employers to give new employees a W4 form to complete. The W4 is a valuable tool in calculating the amount of federal income tax to withhold from the employee's paycheck. The employee states her withholding conditions, such as filing status and allowances, on the form. The employer uses the form and IRS Circular E to figure the withholding. If you want to change your withholding conditions, such as filing exempt, you must submit a new W4 form to your employer. "Exempt" means you are excluded from paying federal income tax. Certain requirements apply to filing exempt.
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Instructions
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Obtain a blank W4 from your employer. The W4 should match the tax year in question. To claim exempt in 2010, for example, use the 2010 W4.
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Verify that you meet the stipulations for claiming exempt. For 2010, you can claim exempt if in the prior year you were entitled to a full refund of your federal income tax withheld because you owed no federal income tax, and if in the present year you expect to receive a refund because you anticipate owing no federal income tax.
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Enter your name, Social Security number and home address on lines 1 through 3 of the W4. Write "exempt" on line 7 of the W4 if you meet the requirements. Sign and date the form, and submit it to your employer within the time frame you want the change to happen.
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Tips & Warnings
The W4 is invalid if you claim allowances on line 5 or indicate an additional amount of tax to be withheld from each paycheck on line 6, along with claiming exempt. The employer should return an invalid W4 form to the employee and request a valid one. If the employee has an earlier valid W4 on file, the employer may use it.
Employees who submit a false W4 may be subject to a $500 penalty from the IRS.
References
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