Form W-4 allows certain employees to certify exemption from federal income tax withholding when specific conditions defined by federal tax law are met. Claiming exemption affects whether federal income tax is withheld from wages during the year.
Meaning of Exempt From Withholding
An exemption from withholding indicates that no federal income tax is withheld from an employee’s wages. This designation applies only to withholding and does not determine whether an individual ultimately owes federal income tax.
Conditions for Claiming Exemption
The Internal Revenue Service limits exemption from withholding to employees who meet defined conditions related to prior-year and current-year federal income tax liability. These conditions are established by federal tax law and IRS guidance.
How the Exemption Is Reflected on the Form
Form W-4 includes a specific certification section for employees who claim exemption from withholding. When this section is completed, the employer applies withholding rules consistent with the exemption status.
Duration of the Exemption
An exemption from withholding is not permanent. Employers rely on the most recent valid Form W-4 on file, and exemption status applies only for the period permitted under Internal Revenue Service rules.