Page 23 - IRS Employer Tax Guide

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Fileid: … ations/P15/2020/A/XML/Cycle07/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
exceptions, see Exemption from federal income tax with- Step 1(c) and made no entries in Step 2, Step 3, or Step 4
holding, IRS review of requested Forms W-4, and Invalid of the 2020 Form W-4. If the employee provides a new
Forms W-4, later in this section. Form W-4 claiming exemption from withholding on Febru-
A Form W-4 that makes a change for the next cal- ary 16 or later, you may apply it to future wages but don't
refund any taxes withheld while the exempt status wasn’t
! endar year won't take effect in the current calen- in place.
CAUTION dar year.
Withholding income taxes on the wages of nonresi-
Successor employer. If you’re a successor employer dent alien employees. In general, you must withhold
(see Successor employer, later in this section), secure federal income taxes on the wages of nonresident alien
new Forms W-4 from the transferred employees unless employees. However, see Pub. 515 for exceptions to this
the “Alternative Procedure” in section 5 of Revenue Pro- general rule. Also see section 3 of Pub. 51 for guidance
cedure 2004-53 applies. See Revenue Procedure on H-2A visa workers.
2004-53, 2004-34 I.R.B. 320, available at IRS.gov/irb/
2004-34_IRB#RP-2004-53. Withholding adjustment for nonresident alien em-
Completing Form W-4. The amount of any federal ployees. You must add an amount to the wages of non-
income tax withholding must be based on filing status, in- resident alien employees performing services within the
come (including income from other jobs), deductions, and United States in order to figure the amount of federal in-
credits. Your employees may not base their withholding come tax to withhold from their wages. The amount is
amounts on a fixed dollar amount or percentage. How- added to their wages solely for calculating federal income
ever, an employee may specify a dollar amount to be with- tax withholding. The amount isn’t included in any box on
held each pay period in addition to the amount of with- the employee's Form W-2 and doesn’t increase the in-
holding based on filing status and other information come tax liability of the employee. The amount also
reported on Form W-4. doesn't increase the social security tax or Medicare tax li-
Employees that are married filing jointly and have spou- ability of the employer or the employee, or the FUTA tax
ses that also currently work, or employees that hold more liability of the employer. See Withholding Adjustment for
than one job at the same time, should account for their Nonresident Alien Employees in section 1 of Pub. 15-T for
higher tax rate by completing Step 2 of their 2020 Form the amount to add to their wages for the payroll period.
W-4. Employees also have the option to report on their Supplemental wage payment. The adjustment for
2020 Form W-4 other income they will receive that isn't determining the amount of income tax withholding for non-
subject to withholding and other deductions they will claim resident alien employees doesn't apply to a supplemental
in order to increase the accuracy of their federal income wage payment (see section 7) if the 37% mandatory flat
tax withholding. rate withholding applies or if the 22% optional flat rate
See Pub. 505 for more information about completing withholding is being used to calculate income tax with-
Form W-4. Along with Form W-4, you may wish to order holding on the supplemental wage payment.
Pub. 505 for use by your employees.
Don't accept any withholding or estimated tax pay- Nonresident alien employee's Form W-4. When com-
ments from your employees in addition to withholding pleting Forms W-4, nonresident aliens are required to:
based on their Form W-4. If they require additional with- • Not claim exemption from income tax withholding;
holding, they should submit a new Form W-4 and, if nec-
essary, pay estimated tax by filing Form 1040-ES or by • Request withholding as if they’re single, regardless of
using EFTPS to make estimated tax payments. Employ- their actual filing status;
ees who receive tips may provide funds to their employer • Not claim the child tax credit or credit for other de-
for withholding on tips; see Collecting taxes on tips in sec- pendents in Step 3 of Form W-4 (if the nonresident
tion 6. alien is a resident of Canada, Mexico, or South Korea,
Exemption from federal income tax withholding. or a student from India, or a business apprentice from
India, he or she may claim, under certain circumstan-
Generally, an employee may claim exemption from fed- ces (see Notice 1392), the child tax credit or credit for
eral income tax withholding because he or she had no in- other dependents); and
come tax liability last year and expects none this year.
See the Form W-4 instructions for more information. How- • Write “Nonresident Alien” or “NRA” in the space below
ever, the wages are still subject to social security and Step 4(c) of Form W-4.
Medicare taxes. See also Invalid Forms W-4, later in this If you maintain an electronic Form W-4 system, you
section. should provide a field for nonresident aliens to enter non-
A Form W-4 claiming exemption from withholding is ef- resident alien status instead of writing “Nonresident Alien”
fective when it is given to the employer and only for that or “NRA” in the space below Step 4(c) of Form W-4. You
calendar year. To continue to be exempt from withholding, should instruct nonresident aliens to see Notice 1392,
an employee must give you a new Form W-4 by February Supplemental Form W-4 Instructions for Nonresident Ali-
15. If the employee doesn't give you a new Form W-4 by ens, before completing Form W-4.
February 15, begin withholding as if he or she had
checked the box for Single or Married filing separately in Form 8233. If a nonresident alien employee claims a
tax treaty exemption from withholding, the employee must

Page 22 Publication 15 (2020)