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Withholding Exemptions - Personal Exemptions - Form W-4

Withholding Exemptions

The amount of wages subject to graduated withholding may be reduced by the personal exemption amount. The personal exemptions allowed in figuring wages subject to graduated withholding are the same as those discussed under Figuring Your Tax, except that an employee must claim them on Form W-4, Employee's Withholding Allowance Certificate. Refer to Publication 505, Tax Withholding and Estimated Tax, for the current personal exemption amount.

Special Instructions for Form W-4 For Nonresident Alien Employees

A nonresident alien subject to wage withholding must give the employer a completed Form W-4 to enable the employer to figure how much income tax to withhold. In completing the form, nonresident aliens should use the following instructions instead of the instructions on Form W-4.

For Forms W-4 completed by nonresident alien employees performing services in the U.S.::

  1. Check only "Single" marital status on line 3 (regardless of actual marital status).
  2. Claim only one withholding allowance on line 5, unless you are a resident of Canada, Mexico, South Korea, a U.S. national, or a student or business apprentice from India.
  3. Do not claim “Exempt” withholding status on line 7.
  4. Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4.

For more information related to the special Form W-4 instructions for nonresident alien employees, including exceptions, refer to Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens.

Special Instructions for Form W-4 For Nonresident Alien Employers

For wages paid to nonresident alien employees, you are required to add an amount to the nonresident alien's wages solely for calculating the income tax withholding for each payroll period. The amount to be added to the nonresident alien´s wages to calculate income tax withholding is set forth in Chapter 9 of Publication 15, (Circular E), Employer's Tax Guide.

Note. Nonresident alien students from India and business apprentices from India are not subject to this procedure.

The amounts added to wages should not be included in any box on the employee's Form W-2 and do not increase the income tax liability of the employee. Also, these amounts do not increase the social security, Medicare, or FUTA tax liability of the employer or the employee. This procedure only applies to nonresident alien employees who have wages subject to income tax withholding.

A Form W-4 remains in effect until the employee gives you a new one. If an employee gives you a Form W-4 that replaces an existing Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4.

Invalid Forms W-4. Any unauthorized change or addition to Form W-4 makes it invalid. This includes taking out any language by which the employee certifies that the form is correct. 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 is false. An employee who submits a false Form W-4 may be subject to a $500 penalty.

When you get an invalid Form W-4, do not use it to figure federal income tax withholding. Tell the employee that it is invalid and ask for another one. If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before.

References/Related Topics

 

Page Last Reviewed or Updated: 31-Oct-2016