Income tax filing day (April 15th) will be here shortly. Whether a school’s employee gets a tax refund or makes a payment generally depends on what is on the two Forms W-4 that the employee completed when they were hired. IRS Form W-4, Employees Withholding Allowance Certificate, and Connecticut Form CT-W4, Employee’s Withholding Certificate, are the forms new employees complete when they are hired to tell you how much income tax to withhold from their paychecks.

Generally, once you receive these forms from an employee you can rely on them from year-to-year until you receive new ones. However, an important exception applies to this general rule. The exception applies to employees who claim an exemption from withholding on their Forms W-4 and, thus, have no income tax withheld from their wages. The exception states that

a Form W-4 claiming an exemption from withholding is effective only for the calendar year for which it is filed. To continue to be exempt from withholding in a subsequent year, an employee must give you new Forms W-4 by February 15.

Caution: If you do not get new Forms W-4 from an employee who claimed an exemption from withholding in the prior calendar year you must withhold at the highest withholding rates moving forward. If you fail to get new Forms W-4 from such an employee and you continue to treat the employee as being exempt from income tax withholding, your school could become liable to the government (federal and/or state) for the income tax that should have been withheld plus interest and penalties.

Information about an employer’s IRS Form W-4 obligations can be found in IRS Publication 15 – Circular E – Employer’s Tax Guide.  Information about an employer’s Connecticut Form CT-W4 obligations can be found in the Connecticut Employer’s Tax Guide – Circular CT.