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Presented Friday, February 7, 2014
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©2014 The Payroll Advisor
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RCH Credit
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Once approved, to earn RCH, you must
Stay on the webinar for the full 60 minutes
Be watching the webinar using your unique URL
Certificates delivered electronically, to email
address with which you registered
Certificates delivered no later than March 7th
©2014 The Payroll Advisor
About the Speaker
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Vicki M. Lambert, CPP, is President and Academic Director of Vicki M.
Lambert, LLC, a firm specializing in payroll education and training. Known
as “The Payroll Advisor,” Ms. Lambert is Founder and Director of
www.thepayrolladvisor.com, a website that provides unique and expert
services for anyone dealing with the complexities and technicalities of the
payroll process.
As an adjunct faculty member at Brandman University, Ms. Lambert is the
creator and instructor for the Practical Payroll Online payroll training
program, which is approved by the APA for recertification credits.
What We Will Cover Today
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Purpose and types of forms
Review Form W-4 line by line
Effective dates for new and expiring forms
What to do if you don’t have a form
Invalid or questionable forms
Processing the forms in payroll
Submitting and retaining forms
Electronic forms
Nonresident aliens and the Form W-4
©2014 The Payroll Advisor
Purpose and Types of Forms
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IRS Form W-4
Actual Name: Employee’s Withholding
Allowance Certificate
Purpose: To know how much income tax to
withhold from the employee’s wages
Also Form W-4s for third party sick pay
New in 2006 Form W-4(SP) Spanish version
State equivalents
©2014 The Payroll Advisor
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©2014 The Payroll Advisor
Let’s Talk About the States
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Employers must verify if the state has
an equivalent form
► The States may:
► Not have their own form and use
the Form W-4
► Have their own form but allow
Form W-4 to be used
► Require only the state form be
used
©2014 The Payroll Advisor
Examples
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Arizona: Form A-4 is required
California: DE4 required if withholding is
different from federal withholding
No state form: Idaho—Use Federal Form W-4
©2014 The Payroll Advisor
Form W-4 Equivalents
WA
MT
ME
ND
VT
MN
OR
NH
ID
WI
SD
WY
RI
CT
MI
PA
IA
NE
NV
OH
IL
UT
MD
WV
KS
MO
NJ
DE
IN
CO
CA
MA
NY
VA
KY
NC
TN
AZ
OK
NM
AR
SC
MS
AL
GA
TX
LA
FL
AK
Must use state form
May use federal Form W-4
No state form must use
federal Form W-4
Restrictions on using Fed
Form W-4
No state income tax
HI
States That Require/Recommend Use of
Their Own Certificate Include…
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Alabama: Form A-4
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Arizona: Form A-4
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Arkansas: Recommends AR-4EC but allows modified Form W-4
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California: Requires DE 4 if withholding is different than federal
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Connecticut: CT-W-4
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District of Columbia: D-4
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Georgia: Form G-4
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Hawaii: Form HW-4
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Illinois: IL-W4
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Indiana: WH-4
©2014 The Payroll Advisor
Our First Polling Question
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
Before we continue our
discussion let’s take our first
polling question of the day…
©2014 The Payroll Advisor
States That Require/Recommend Use of
Their Own Certificate Include…
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Iowa: Iowa W-4
Kansas K-4
Kentucky: Form K-4
Louisiana: Form L-4 or L4E should be used but accepts (mutually agreed
upon) modified Form W-4—employer responsible to determine number
of correct allowances
Maine: Form W-4ME
Maryland: Form MW 507
Massachusetts: M-4 required if state exemptions differ from fed
Michigan: MI-W4
Minnesota: W-4MN
Mississippi: Form 89-350
Missouri: MO W-4
New Jersey: NJ-W-4 or Form W-4 may be used
©2014 The Payroll Advisor
States That Require/Recommend Use of
Their Own Certificate Include…
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New York: Accepts W-4 recommends Form IT2104
North Carolina: Form NC-4 or NC-4EZ
Ohio: Form IT-4
Rhode Island: Form RI W-4
Vermont: Form W-4VT is recommended
Virginia: Form VA-4
West Virginia: WV/IT 104
Wisconsin: WT-4 if state exemptions differ from
fed
©2014 The Payroll Advisor
States That Have No Form Include…
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Colorado
Delaware: Has Form
SD/W4 for calculating
only use Fed W-4
“For Delaware
Purposes Only”
Idaho
Montana
©2014 The Payroll Advisor
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Nebraska
New Mexico
North Dakota
Oklahoma
Oregon
Pennsylvania
South Carolina
Utah
Possible Other Forms on State Level
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Special forms for employee to
claim exempt from state income
tax
Special form for military spouse to
use to claim exempt from state
income tax
Forms for nonresidents of the
state
Reciprocal agreement forms
©2014 The Payroll Advisor
Example of Exempt Form-NY
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Completes the form if the
employee is claiming exempt
from state income tax
Also used by Military spouses
©2014 The Payroll Advisor
Example of Nonresident Form-CT
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Completes the form if the
employee is a nonresident
who performs services partly
within and partly outside of
Connecticut for same
employer
Must also complete Form CTW4
©2014 The Payroll Advisor
One Form Mostly Fits All
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Use the same form for most
purposes
Example is Georgia
Use the G-4 to claim exempt
from withholding if owing no
tax and for military spouse
exemption
©2014 The Payroll Advisor
States That Use Special Form
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Example: Pennsylvania
Local Earned Income Tax Residency
Certification Form: DCED-CLGS-06
For more info on tax go to
http://www.newpa.com/node/674
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©2014 The Payroll Advisor
For Example:
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IL has agreement with WI
Resident of WI works in IL
but does not want IL tax
taken out—completes Form
IL-W-5-NR—NO IL tax is
withheld
Employer may but IS NOT
required to withhold for WI
©2014 The Payroll Advisor
For Example 2:
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WI has agreement with IL
Resident of IL works in WI but
does not want WI tax taken
out—completes Form W220—NO WI tax is withheld
Employer may but IS NOT
required to withhold for IL
©2014 The Payroll Advisor
Useful Links
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http://www.payroll-taxes.com/state-tax
http://www.dol.gov/oasam/doljobs/statetaxform
s.htm
©2014 The Payroll Advisor
Review Form W-4
Line by Line
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New
Forms
must
always be
current
year
First name,
middle initial
and last name
always must
appear on the
form
©2014 The Payroll Advisor
Address
must be
on the
form
Line by Line
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Goes without
saying… must
have this one!
Just
mention to
employee
©2014 The Payroll Advisor
Must
designate
marital status
Line by Line
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Must have the
number of
allowances
No
Percentages
©2014 The Payroll Advisor
Dollar amount only and
it can not stand alone.
Must be with
allowances and martial
status
Line by Line
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Employee claims
exempt here
Employee signs here
©2014 The Payroll Advisor
Dates goes here
Line by Line
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If sending to IRS
fill these boxes in
©2014 The Payroll Advisor
Effective Dates for Forms
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All new employees need to complete form
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All forms except exempt forms remain in effect
until a new form is received
Exempt forms expire 12-31 of each year
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No form? Use single and zero until received
Have until 2-15 to submit new form
Use single – zero if new form not received
Up to 30 days to input new forms
©2014 The Payroll Advisor
Practical Point
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Employers should not
accept any withholding or
estimated tax payments
from employees in
addition or instead of the
withholding based on
their Form W-4
©2014 The Payroll Advisor
What Makes a Form Invalid
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Any unauthorized change
or addition makes a form
invalid
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Includes taking out any
language
Employee indicating
either verbally or in
writing that the form is
false
An incomplete form
©2014 The Payroll Advisor
How To Handle
an Invalid Form
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Do not use the invalid form to determine
withholding
Inform the employee the form is invalid
Request new form from employee
Use a previously submitted form to
determine withholding
No previous form? Use single/zero
©2014 The Payroll Advisor
Questionable Forms
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Employers are not the
Form W-4 “Police” (on the
federal level anyway) and
are not responsible for
verifying the number of
allowances claimed by the
employee.
As long as it is a valid form,
the employer accepts it.
©2014 The Payroll Advisor
Processing the Forms in Payroll
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Each form should be reviewed to
ensure validity before processing
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Filled out completely and
correctly
Signed and dated
Invalid or incomplete forms
should never be processed
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Return to employee
Template letters are an easy
method to use
©2014 The Payroll Advisor
Our Second Polling Question
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Before we continue on with our
webinar and submitting forms to the
IRS let’s do our second polling
question of the day focusing handling
invalid Forms W-4
©2014 The Payroll Advisor
Sample Memo for Missing Information on
the Form W-4
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From: The payroll department
To: Insert employee’s name here
Re: Incomplete Form W-4
Dear: Insert employee’s name here.
The payroll department has received your Form W-4, dated (insert date of form
here). However, we are unable to complete the processing of the form due to
missing information. Please provide the required information where we have
highlighted the form in yellow.
When you have finished providing the missing information, please return the
form to the payroll office.
Thank you for your prompt attention to this matter.
©2014 The Payroll Advisor
Sample Memo Invalid Form W4
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From: The payroll department
To: Insert employee’s name
Re: Invalid Form W-4 submitted to payroll
Dear: Insert employee’s name here
It is necessary for the payroll department to return your Form W-4, dated (insert date of form
here). We are unable to process the form. IRS regulations do no allow us to accept and/or
process any Form W-4 that claims a fixed dollar amount only or a percentage.
According to the IRS:
The amount of income tax withholding must be based on marital status and number of
allowances only. You may specify any additional dollar amount as well.
If you still wish to change your withholding please complete a new Form W-4 and submit it to
payroll at your earliest convenience.
©2014 The Payroll Advisor
Submitting Forms W-4
to the IRS
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As of April, 2005, no longer required as a routine
function by IRS
When requested by the IRS, you must make
original Forms W-4 available for inspection by an
IRS employee
You may also be directed to send certain Forms W4 to the IRS.
Send the requested copy or copies of Form W-4 to
the IRS at the address provided and in the manner
directed by the notice.
©2014 The Payroll Advisor
IRS Review of Forms
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After submitting a copy of a
requested Form W-4 to the IRS,
continue to withhold federal
income tax based on that Form
W-4
The IRS also uses information
reported on Form W-2 to identify
employees with withholding
compliance problems
©2014 The Payroll Advisor
IRS Review of Forms
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In some cases, if a serious underwithholding problem is found to
exist for a particular employee,
the IRS may issue a letter to the
employer specifying the
maximum number of
withholding allowances and
marital status permitted for a
specific employee
Commonly referred to as a "lockin letter”
©2014 The Payroll Advisor
Lock-In Letters
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You must furnish this notice to
the employee within 10 business
days of receipt if the employee is
employed by you as of the date of
the notice
Begin withholding based on the
notice on the date specified in
the notice.
©2014 The Payroll Advisor
Use Lock-In Letters for
Terminated Employees If…
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You are paying wages for the employee's prior
services and the wages are subject to income tax
withholding on or after the date specified in the
notice.
You reasonably expect the employee to resume
services within 12 months of the date of the
notice.
The employee is on a leave of absence that does
not exceed 12 months or the employee has a right
to reemployment after the leave of absence.
©2014 The Payroll Advisor
Modified Lock-In Letters
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The IRS may issue a subsequent notice
(modification notice) that modifies the original
notice
The modification notice may change the marital
status and/or the number of withholding
allowances permitted.
You must withhold federal income tax based on
effective date specified in the modification
notice.
©2014 The Payroll Advisor
Accepting New Forms
from the Employee
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If the employee with an active lock-in letter
provides you with a new Form W-4 claiming
complete exemption from withholding or claims a
marital status, a number of withholding
allowances, and any additional withholding that
results in less withholding than would result
under the IRS notice or modification notice,
disregard the new Form W-4
©2014 The Payroll Advisor
Submitting to the State
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State may still require a Form W-4 to be submitted
For example Connecticut requires the form to be
submitted if the employee claims three times the
maximum personal exemption amount available
to an employee. So the employer should multiply
the maximum personal exemption amount for the
taxable year by a factor of three to determine if the
Form CT-W4 of an employee must be sent to DRS.
©2014 The Payroll Advisor
Retaining Form W-4
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Current form until replaced
Expired or replaced forms—
minimum four years plus
current tax year
©2014 The Payroll Advisor
Electronic Forms
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May establish system that allows
employees to submit their initial form
or change existing form electronically
Paper form must be available as well
Paper form can be required for some
employees if business reason justifies
Must be able to provide questionable
forms to IRS electronically
©2014 The Payroll Advisor
Final Polling Question of the Day
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Let’s pause before we begin
discussing the specs of
electronic Forms W-4 to
take our final polling
question of the day…
©2014 The Payroll Advisor
Tech Specs for Electronic Forms
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Electronic version must contain
exact same info as the paper
version-no exceptions
Must be PIN or verified system
Lock-in letter compliance must
be available
Perjury statement must be there
Employees must understand that
it is signed under penalty of
perjury just like the paper form
©2014 The Payroll Advisor
Tech Spec Continued
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Electronic signature required
Must be able to print hard
copy
All other regulations apply the
same as paper form
Practical Point: Good to have a
system that requires employee
to acknowledge perjury
statement in order to submit
as a separate step
©2014 The Payroll Advisor
Form W-4 Nonresident Aliens
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Cannot claim exempt
Request only single regardless of marital status
Claim only one allowance
If from Canada, Mexico or Korea may claim more
than one allowance
Write “nonresident alien” or “NRA” above dotted
line on line 6 of form
Electronic version must provide this field
©2014 The Payroll Advisor
Add Nonresident Alien
or NRA
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Nonresident Alien
Put nonresident
alien here
©2014 The Payroll Advisor
Are There Any Questions?
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©2014 The Payroll Advisor
How Can Ascentis Help Me?
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payroll taxes
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 Compliant with the Electronic Federal Tax Payment System
(EFTPS) for all tax payments
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 Ascentis stays up-to-date on all the tax law changes so you don’t
have to
 Knowledgeable tax operations staff available to answer
questions and help avoid problems
 Eliminate the hassle of year-end preparation and filing of W-2s
and 1099s
 Customized and detailed tax summary statements
RCH Credit
55





Once approved, to earn RCH, you must
Stay on the webinar for the full 60 minutes
Be watching the webinar using your unique URL
Certificates delivered electronically, to email
address with which you registered
Certificates delivered no later than March 7th
Download Slides? Watch again?
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On-Demand Webinars?
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Contact Us
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[email protected]
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800.229.2713