Payroll Tax Withholding and Reporting

Payroll Tax Withholding and Reporting

U.S. Citizens and Permanent Residents

All employees must complete IRS Form W-4, Employee's Withholding Allowance Certificate, so that an employer may know how much income tax to withhold from wages. The withholding amount is based on marital status and number of withholding allowances.Employees may not request of fixeddollar amount or percentage of gross calculation for thewithholding amount.However, employees may specify a dollar amount to be withheldin addition to the amount of withholding based on marital status and allowances claimed.

Exemption From Income Tax Withholding

Generally, employees may claim exemption from income tax withholding when they had no income tax liability last year and expect none this year. See the Form W-4 instructions for more information.

A Form W-4 claiming exemption from withholding is valid for only one calendar year. To continue the exemption for the next calendar year, employees must file a new Form W-4 by mid-February every year.

When employees claim more than 10 deductions or claim exempt while earning more than $800 per month, a copy of their W-4 will be forwarded to both the Oregon Department of Revenue and the Internal Revenue Service.

Tax Withholding Calculation

The IRS has developed an application that assists employees when they complete IRS Form W-4. Using the on-line calculator ensures that employees do not have too much or too little income tax withheld from their paychecks. See IRSWithholding Calculator.

Helpful IRS Publications

In cases of complex tax situations, IRS does not recommend the use of the IRS Calculator. Instead employees should read IRS Publication 919, How Do I Adjust My Tax Withholding?

Student employees might want to visit the IRS website to read more about Taxable Income for Students. Also see IRS Publication 970, Tax Benefits for Education, for more information on how much of a scholarship or fellowship is taxable.

International Employees

For detailed instructions oncompleting the W-4 and other forms for claiming exemption from U.S. taxes, see the link to the left entitled International Employees. This section of the BAO Employee Services website lists countries that have international tax treaties with the United States, along with other important information specific to international employees. Additional tax information is available on the IRS website and in the following IRS Publications:

Publication 519 U.S. Tax Guide for Aliens

Publication 513 Tax Information for Visitors to the U.S.

Monthly Deadline (for W-4 submission)

W-4s received in the Payroll Office by mid-month will be processed for the month-end payroll.W-4s received after that time will be processed on the following month's payroll.