The federal government requires that employers withhold certain federal taxes from employees’ income. This includes federal income tax, and Social Security and Medicare taxes; the latter two are also called FICA (Federal Insurance Contributions Act) taxes. These deductions are statutory and can be difficult to stop. But under certain circumstances, you can stop them.
Claim “exempt” status on your W-4 form to stop your federal income tax deduction. According to the 2010 Form W-4 , you can claim exemption from withholding for 2010 under the following circumstances: last year you were entitled to a refund of all your federal income tax withheld because you had no tax liability and this year you anticipate a full refund because you expect no tax liability. If you qualify for exempt status, complete Line 7 of the W-4 and submit to your employer.
Claim more dependents. In general, the more dependents you claim, the less federal income tax you pay. Depending on your situation, claiming enough dependents can result in no federal income tax withheld from your paycheck. If you are claiming more dependents, ensure that you can claim them on your tax return. Otherwise, you may end up owing the IRS.
Keep in mind that typically employees cannot stop FICA withholding. U.S. citizens and resident aliens are required to pay both Medicare and Social Security taxes on wages. However, non-immigrants and non-resident aliens with A-visas, D-visas, F-visas, J-visas, M-visas, Q-visas, G-visas and H-visas are exempt from Social Security and Medicare taxes.
Tips
You can estimate what your withholding will be by using the IRS Circular E. Use the wage bracket method or the percentage method to determine what your federal income tax would be based on your filing status, income, and dependents. Use the IRS withholding calculator if you want to know if enough federal income taxes are being withheld from your paycheck. Have your paycheck stub handy when using the calculator.
References
- IRS: 2010 Circular E
- Social Security Administration. "Fact Sheet: 2021 Social Security Changes." Accessed Oct. 31, 2020.
- Internal Revenue Service. "Topic No. 554 Self-Employment Tax." Accessed Oct. 31, 2020.
- Internal Revenue Service. "Social Security/Medicare and Self-Employment Tax Liability of Foreign Students, Scholars, Teachers, Researchers, and Trainees." Accessed Oct. 31, 2020.
- Internal Revenue Service. "Social Security Tax / Medicare Tax and Self-Employment." Accessed Oct. 31, 2020.
- Internal Revenue Service. "Publication 519: U.S. Tax Guide for Aliens," Page 43. Accessed Oct. 31, 2020.
- Cornell Law School Legal Information Institute. "U.S. Code Section 6511. Limitations on Credit or Refund." Accessed Oct. 31, 2020.
Tips
- You can estimate what your withholding will be by using the IRS Circular E. Use the wage bracket method or the percentage method to determine what your federal income tax would be based on your filing status, income, and dependents.
- Use the IRS withholding calculator if you want to know if enough federal income taxes are being withheld from your paycheck. Have your paycheck stub handy when using the calculator.
Writer Bio
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.