Purpose
To inform agencies of the processing requirements for employees who claim exempt from Federal, State and/or Local tax withholding in tax year 2019
Affected Employees
Employees who claimed exempt from Federal, State and/or Local tax withholdings in 2018 and employees who submit withholding allowance certificates claiming exempt in 2019
Effective Date(s)
According to IRS Publication 505 (Tax Withholding and Estimated Tax) and IRS Instructions for Form W-4 (Employees Withholding Allowance Certificate), employees who claimed exempt from Federal withholding for tax year 2018 must file a new Form W-4 by February 15, 2019 to claim exemption for tax year 2019. The new 2019 Form W-4 is now available on the Internal Revenue Service (IRS) website.
The New York State Department of Taxation and Finance requires a new form IT-2104-E (Certificate of Exemption from Withholding) to be filed annually by employees who claim exempt from New York State, New York City or Yonkers withholding.
Agency Actions
The following Control-D report is available for agency use.NPAY738 - Employees Exempt from State and Federal Taxes
This report identifies employees who claimed exempt from Federal, State and/or Local tax withholding for tax year 2018.
Agencies must review the NPAY738 Control-D report and request a new Form W-4 and/or IT-2104-E from all employees appearing on the report.
If the employee does provide new forms, agencies must update the employee’s Federal, State and/or Local Tax Data pages as follows:
- Main Menu>Payroll for North America>Employee Pay Data USA>Tax Information>Update Employee Tax Data.
- Select the Federal Tax Data page.
- Insert a new row with a valid effective date for 2019.
- Under the Special Withholding Tax Status (on either the Federal or State page as appropriate), select “Maintain taxable gross.” FWT will be zero.
- Save the page.
Note: The above steps must also be followed to update the State and Local Tax Data pages.
If an employee appearing on the report does not provide new Forms W-4 and/or IT-2104-E, the agency must update the employee’s Federal, State and/or Local tax Data pages as follows:
- Main Menu>Payroll for North America>Employee Pay Data USA>Tax Information>Update Employee Tax Data.
- Select the Federal Tax Data page.
- Insert a new row with a valid effective date for 2019.
- Under the Special Withholding Tax Status, (on either the Federal or State page as appropriate) select “None.”
- Set the Tax Marital Status to “Single.”
- Withholding Allowances “0.”
- Save the page.
Note: To claim exempt from tax withholdings and be in compliance with IRS and NYS Rules and Regulations, agencies must update the employee’s Tax Data page, with the 2019 information, as instructed above.
Questions
Questions regarding this bulletin may be directed to the Tax and Compliance mailbox.