Claiming tax-exempt status on your W-4

Employees use the W-4 form to determine the amount of federal and state income tax withheld from their 7shifts Payroll paychecks. Claiming tax-exempt status indicates that no federal income tax should be withheld from your earnings.

Things to know

• Tax-exempt status only applies to federal income tax and does not exempt you from Social Security or Medicare taxes.
• State tax-exempt rules vary by location, and some states do not permit tax-exempt status.
• Providing incorrect tax-exempt information may result in tax liabilities and penalties at the end of the year.
• Tax-exempt status is not permanent and must be renewed annually.

W-4 tax-exempt requirements

You can only claim tax-exempt status on your W-4 if both of the following conditions are true:

• You had no federal income tax liability in the previous tax year.
• You expect to have no federal income tax liability in the current tax year.

If your pay or personal situation changes during the year, you should update your W-4 in 7shifts to ensure your withholding remains accurate.

Annual renewal deadline

To maintain tax-exempt status, you must submit a new W-4 form by February 15th each year. If a new form is not filed by this deadline, 7shifts Payroll must withhold taxes at the default rate for a single filer with no other adjustments.

Withholding resources

The Tax Withholding Estimator - IRS can help you determine the correct amount of tax to withhold from your paycheck. Detailed instructions and form information are available in the About Form W-4 - IRS guide.