Vision Payroll

This week’s question comes from Tim, a Director of Payroll. One of our employees is the spouse of a military member. She is claiming exemption from state withholding for 2009. How do we treat employees who claim exemption under the Military Spouses Residency Relief Act (the Act)? Answer: President Barack Obama signed the Act (Public Law 111-97) into law in November. Under the Act, spouses of military personnel who are present in or absent from a domicile due to compliance with military orders will not have their tax residence impacted by such presence or absence. The Act generally affects tax years 2009 and beyond. Affected employees should file an amended withholding form with their employers to claim exemption from withholding. Employers must not withhold taxes on employees who claim exemption under the Act. For 2009 tax years, affected employees should receive a refund of any tax withheld by filing a non-resident tax return in that state. Contact Vision Payroll if you have any questions on the Military Spouses Residency Relief Act.

This week’s question comes from Donna, an office manager. An employee wants to change the number exemptions (withholding allowances) claimed. What should I do? Answer: Have the employee complete and sign Form W-4, Employee’s Withholding Allowance Certificate. Always use the current year version of the form. By completing the Personal Allowances Worksheet attached to the form, the employee can calculate the correct number of allowances to claim to minimize any balance due or interest-free loan to the government. Remember that withholding allowances rarely equal the number of exemptions claimed on a tax return. If an employee is claiming an exemption from withholding, a new Form W-4 must be filed every year by February 15. Once you receive the new W-4, be sure to update your payroll records online or contact Vision Payroll with the updated information.