Recently, the Internal Revenue Service (IRS) unveiled the 2022 Form W-4 (Employee’s Withholding Certificate). Fortunately for employers, the form is very similar to its 2021 counterpart, with only a few minor updates. DM Payroll Solutions outlines the changes to this year’s Form W-4 to ensure you have all the answers for your employees.

Small Change in Instructions

The instructions for Step 3, Claim Dependents, urges employees to review Publication 501, Dependents, Standard Deduction and Filing Information for details on applying the Child Tax Credit as well as applying the credit to other dependents.

Claiming Exemption from Withholding

For 2021, employees can claim exemption from withholding if both of the following conditions are met:

1. The employee had a right to a refund of all federal income tax withheld due to the individual having no tax liability.
2. The employee expects a full refund of all federal income tax withheld because they expect to have no tax liability.

An individual did not have federal income tax liability in 2021 if the total tax on Line 24 of the 2021 Form 1040 or Form 1040-SR is zero (or less than the total of Lines 27a, 28, 29 and 30), or the individual wasn’t required to file a return because their income was below the filing threshold for their correct filing status.

For an individual to claim exemption from withholding, they must confirm they meet both of the above conditions and write “exempt” on their Form W-4 in the space below Step 4(c). The employee must then only complete Steps 1(a), 1(b) and 5 and sign the form to validate it. The 2022 exemption expires on Feb. 15, 2023.

Instructions for Nonresident Aliens

Nonresident aliens are encouraged to read Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens prior to completing their Form W-4.

Stay Up-to-Date

With the 2022 Form W-4 differing slightly from its predecessor, it is important to provide your employees with the most recent version available. If you have any questions about the new Form W-4 or need help reporting your employees’ withholding information, be sure to contact DM Payroll Solutions today.