federal income and social security tax on form

Am I Exempt from Federal Withholding?

If you’re exempt from federal withholding, then your employer will not withhold federal income tax from your paychecks. They’ll still withhold Social Security, Medicare, and state and local income taxes.

Am I exempt from federal income tax withholding?

According to the IRS, you can claim the exemption if:

  • you had no tax liability last year and a refund of all your federal income tax withholdings, and
  • you expect a refund of all your income tax withholdings because you will have no tax liability this year.

If you’re not sure if you’re exempt, you can use this flowchart or these worksheets from the IRS to help you decide.

How do I claim my exemption?

If you’ve determined that you’re exempt from federal income tax withholding, you can’t just tell your boss. Instead, you’ll need to fill out a new W-4 form and submit it to your employer. On your W-4, leave lines 5 and 6 blank and write “exempt” on line 7.

Your W-4 is used to determine how much income tax your employer should withhold, and the form usually doesn’t expire. But, if you’re claiming the exemption, you will need to submit a new form to your employer every year by February 15. If you submit the form after February 15, your employer won’t be able to accept the exemption and will have to start withholding federal income tax from your paychecks.

Learn more about filling out a W-4.

What happens if my employer already withheld federal income tax?

Your employer has to withhold income tax from your checks until they receive your W-4 claiming exemption. If you’ve been paid this year and had income tax withheld, you’ll receive a W-2 at the end of the year that includes how much was withheld, and you can claim a refund when you file your annual tax return.