Page 201 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
The second page of the form is a considerably more complex vari-
ation of the top portion of the first page, and is intended to assist
employees who itemize their tax returns in determining the correct
amount of their projected withholdings. The page is split into thirds.
The top third is for the use of single filers; the middle third is intended

for a household of two wage earners; and the bottom third is a wage
table to be used by households of two wage earners.
If for some reason the payroll staff has not received a W-4 form
from a new employee as of the date when payroll must be calculated,
the IRS requires payroll to assume the person to be single, with no
withholding allowances. This is the most conservative way to calculate
someone’s income taxes,resulting in the largest possible amount of taxes

withheld.

T IPS &T ECHNIQUES

Employees who claim complete exemption from federal tax with-
holdings on their W-4 forms must file a new form each year, or else
be liable for withholding that equates to a single marital status and
zero allowances. Employees probably will not know about this refiling
requirement, so the payroll department should send them periodic
reminders. This can be time-consuming, since W-4 forms are usually
buried in an employee’s payroll file and are not reviewed regularly.
One approach is to create a “tickler” file containing copies of only
those W-4 forms that must be replaced regularly; and make a nota-
tion on the departmental activities calendar to review the tickler file
on specific dates. Another solution is to set up a meeting date in an
electronic planner (such as Microsoft Outlook) that will issue an
alert on the user’s computer to review this issue on specific dates.
The meeting alert can even be sent automatically to those people who
are required to complete new W-4 forms, though you must be sure
they must have ready access to a computer to receive this warning.

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