Federal and State W-4 Rules for 2015
 

Federal and State W-4 Rules for 2015

Let's take a look at W-4s. As we all know, this is the document that employees turn in to an employer to calculate federal and (sometimes) state withholdings.

There was once a time when - if the employee turned in a W-4 with more than 10 exemptions - the W-4 needed to be sent to the federal government for verification. This requirement no longer exists, except for California state withholdings.

Elsewhere, a lock-in letter replaced this requirement. If an employer receives a lock-in letter from the IRS, the employer is then required to use the IRS calculation of exemptions instead of the employee W-4. The rare exception is if an employee submits a new W-4 with more taxes that are calculated than the lock-in letter-again, this is very rare. A lock-in letter trumps a W-4 and must be put in place by the employer no more than 60 days after it is received.

"How many times can an employee change their W-4?" is a common question. Actually, there is no minimum or maximum number of times. However, an employer has up to 30 days to implement the change. Another common question is "Does a W-4 expire?" There is no expiration date for W-4s so you could be correct to use a 1984 (or any other year) W-4, if no change has ever been received from the employee.  Read more on CPA Practice Advisor