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What to Know About Withholding Payroll Taxes

The IRS takes W-4s seriously, and so should you.

What to Know About Withholding Payroll Taxes

When you hire an employee, you must have the employee complete a Form W-4 (Withholding Allowance Certificate). Form W-4 reports the employee's marital status, withholding allowances, and any additional amount to use in withholding federal income taxes from the employees' pay. If an employee fails to provide the employer with a properly completed Form W-4, the employer is required to withhold federal income taxes from the employee's wages as if he or she were single and claiming no withholding allowances.

If an employee qualifies, Form W-4 (lines 1-4 and 7) is also used by the employee to inform the employer not to deduct any federal income taxes from his or her wages.

To qualify for exempt status, the employee must have had no tax liability for the previous year and must expect to have no tax liability for the current year. However, if the employee can be claimed as a dependent ...

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Posted:
  • April 1, 2010

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