Tip: How to Implement a New W-4—and Handle Complaints


Problem: Employees try to increase their take-home pay by handing in a new W-4 with more withholding allowances or by claiming exempt from withholding.

Solution: Tell employees that you are not required to post the new W-4 until the first payroll period ending on or after the 30th day from the date the new W-4 was submitted (see IRS Circular E). This is the most time that the law allows.

Example: Joe is paid on the 15th and 30th of each month and submits a new W-4 on June 10. The June 10 withholding changes must be used on his paycheck of July 15, the first payroll period following June 30.

Received and pay all taxes on it whether or not the employer paid them. [Ackerman v. Comm’r., T.C. Memo 2006-3]


Source: American Institute of Professional Bookkeepers
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