Q: When an employee wants to change their tax information, for example move from 2 to 1 exemption or single to married, can they make that change to their W4 filing on our employee self-service system?
A: Typically, under the law, electronic changes to a W4 are acceptable if the employees electronically sign the revised form. The employees are essentially attesting to the truthfulness of the information they are providing in the electronic system.
It is possible that there could be a concern if the company has received an IRS “lock-in” letter with respect to an employee. A lock-in letter dictates the amount of withholding the company must do for that employee. The self-service system cannot allow the employee to alter his or her withholding in any way that doesn’t comply with an IRS lock-in letter. In implementing any system, you may need to make changes and use a paper form solely for certain employees if you receive a lock-in letter.
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