Sometimes Omni receives improperly completed withholding certificates from employees who believe they are 'exempt' from federal and/or state withholding tax. Here is a simple explanation of the 'exempt' filing status that will help keep you and your employees "happy" at tax time.
"Exempt" means no federal and/or state income tax will be withheld from the employees' paycheck.
Following are general guidelines for employees who wish to claim exemption from federal and/or state withholding tax from their paycheck:
1. They had no tax liability in the prior year
AND
2. They do not expect to have tax liability for the
current year
If BOTH of these conditions are met, then the employee should complete the appropriate withholding certificate as follows:
Federal W-4 - Line 7 - Write "Exempt"
MD-MW-507 - Line 3 - Check boxes a and b and
write "Exempt"
VA-VA-4 - Line 3 - Check Box
There are other conditions that could cause an employee to be 'exempt' from state withholding. We recommend the employee consult the instructions that accompany the state withholding certificate or contact their tax advisor for additional guidance.
Employees must complete a new federal and/or state withholding certificate EACH year they claim exemption from withholding tax. These are due no later than February 15th of each calendar year.
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