Q & A – What withholding allowances is an employee entitled to claim?

Q: What withholding allowances is an employee entitled to claim?

A: Following a list of the withholding allowances an employee is entitled to claim:

    ·         One for the employee (unless she/he can be claimed as a dependent by someone else).
     ·         One if:
o   You’re single and have only one job; or
o   You’re married, have only one job, and your spouse doesn’t work; or
o   Your wages from a second job or your spouse’s wages (or the total of both) are $1,500 or less. }
·         One for the employee’s spouse, but you may choose to enter “-0-” if you are married and have either a working spouse or more than one job.
·         One for each dependent to be claimed on the employee’s personal tax return (other than the employee’s spouse).
·         One if you will file as head of household on your tax return (see conditions under Head of household)
·         Enter “1” if you have at least $2,000 of child or dependent care expenses for which you plan to claim a credit. Do not include child support payments.
·         Child Tax Credit (including additional child tax credit).
·         If your total income will be less than $70,000 ($100,000 if married), enter “2” for each eligible child; then less “1” if you have two to four eligible children or less “2” if you have five or more eligible children.
·         If your total income will be between $70,000 and $84,000 ($100,000 and $119,000 if married), enter “1” for each eligible child.
The payroll department is not responsible for verifying the number of withholding allowances to which an employee is entitled, but the form is invalid if there has been any unauthorized change or addition to Form W-4. This includes taking out any language by which the employee certifies that the form is correct, material defacing of the form, or any writing on the form other than the entries requested. A Form W-4 is also invalid if by the date an employee gives it to you, he or she indicates in any way that it’s false.
Also, the Internal Revenue Service (IRS) may notify you in writing that the employee is not entitled to claim exempt from withholding or a total number of allowances greater than the maximum number specified in the notice (commonly referred to as a “lock-in letter.”)  The letter will also specify the employee’s marital status for purposes of calculating the required amount of withholding.
A lock-in letter is typically issued by the IRS when it determines that the W-4 contains a materially incorrect statement or that the employee is not entitled to claim exempt from withholding or more than a specified number of withholding exemptions based on IRS records.  You must withhold taxes from the employee’s wages based on the allowances specified in the IRS lock-in letter and put it into effect as of the date specified in the letter.  After a lock-in letter has been issued by the IRS, you must disregard any new W-4 submitted by the employee until notified by the IRS to withhold based on that form UNLESS the new W-4 results in more withholding than required under the lock-in letter.