This person is working in CA. They are claiming 1 deduction. Are paid by the hour. Recently graduated college.
What am I responsible for as an employer for her wage reporting?
2007-08-01 10:05:22 · 8 answers · asked by Andy B 1 in Business & Finance ➔ Taxes ➔ United States
Well, is she claiming exempt or is she claiming one allowance on her W-4? Remember, she recently graduated and may only have six months of salary. She may owe no tax.
You are not required to be her tax advisor. If there is an inconsistency in her W-4, ask her to clarify it. Then accept her W-4 and do her withholding as she directs. In January, you may give her another blank W-4 and ask if she wishes to revise it, now that she will anticipate a full year of wages.
2007-08-01 11:05:36 · answer #1 · answered by ninasgramma 7 · 0⤊ 0⤋
It's possible, but unlikely - she'd have to have huge itemized deductions or adjustments. Or if she has a dependent child under age 17, she might be able to since she might get a child tax credit and EIC, which could wipe out her tax liability. Otherwise, she'd have tax liability for the year, so would not be eligible to claim exempt on her W-4.
You might ask her if she's sure she meets the requirements to file exempt, and explain that this doesn't relieve her from her obligation to pay taxes, just means nothing is deducted, so at the end of the year she'll owe not only any taxes due, but also possible penalties and a fine for falsely claiming exempt if she isn't - she might just not understand the form. Or maybe she does understand it, has a dependent child or two, and just doesn't want you to know that.
2007-08-01 12:47:09 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
At that income level it's possible but not likely. She would have to have large itemized deductions and/or be supporting a fair number of dependents to be able to claim EXEMPT status on her Form W-4.
If you have solid evidence that she may be filing a fraudulent Form W-4, you should advise the IRS. You may wish to caution her that there is a $500 penalty levied by the IRS for filing a fraudulent Form W-4 on top of any taxes, penalties and interest due, and give her a chance to file a corrected Form W-4 with you.
There's a grey area on reporting these to the IRS now. It used to be you had to file all EXEMPT claims as well as any that claimed 10 or more withholding allowances with the IRS. Now, you only need to file them with the IRS upon request by the IRS. It's quite likely that once you start reporting significant wages with no FIT withholdings that the IRS will ask for a copy of the Form W-4.
The grey area is that if you have knowledge of criminal fraud you have a duty to report it. If you know nothing of her personal circumstances you'd probably be safe in not reporting anything but do keep your copy of the Form W-4 so you'll have it if the IRS asks for it.
A Form W-4 that claims EXEMPT status expires in February of the following year. You'll have to ask her to file a new Form W-4 after the new year. If she fails to file a new one then you must start withholding at Single + 0 in Feb 1, 2008.
2007-08-01 12:11:45 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 0⤋
If you notice on the Form W-4, line 7 says that if the employee had a refund of all federal income tax withheld because they had no tax liability and this year they expect a refund of all federal tax, then they may write "exempt".
So the the truth is, you don't know but what they have 3 kids at home and are a single mother, in which case they would probably have no tax owed. At most, you may be required to fax the W-4 to the IRS. I would research this at www.irs.gov if it were me.
2007-08-01 10:30:08 · answer #4 · answered by dkarlsenyh 3 · 0⤊ 0⤋
I would say "No"
If she was a student, she may have had no liability last year but to be "Exempt" she would have to expect to have no liability this year. Even with some hefty tuition expenses, I do not think her liability would be "0.00" this year.
I am guessing the she misread the W4. Have her fill out a new one.
If someone is truly exempt, they wouldn't need to put down the "1" as there would be no withholding.
2007-08-01 10:28:09 · answer #5 · answered by Wayne Z 7 · 0⤊ 0⤋
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2016-05-20 02:33:02 · answer #6 · answered by ? 3 · 0⤊ 0⤋
It's possible for her to claim exempt legitimately.
Regardless, as her employer, it is your responsibility to follow her W-4 and not withhold any federal income tax from her paycheck.
It is not your responsibility to question her about why she is exempt.
2007-08-02 02:20:59 · answer #7 · answered by Plea_of_insanity 5 · 0⤊ 0⤋
Your real question is: Are you going to be in any trouble with the IRS for allowing it? And the answer is no.
She's responsible for filling out the form. If English is her 2nd language or if you really think she doesn't understand, you should try explaining it to her.
Bottom line, if she doesn't have enough withheld, she'll have to pay a penalty.
2007-08-04 17:15:54 · answer #8 · answered by Anonymous · 0⤊ 0⤋