is there a rule on max w-4 allowances

[schirallicpa]

And if there is, is there some additional reporting, or whats the scope? I have a business client and I noticed one of the employees claims 11 exemptions and its ringing a little bell that there is a limit.

[ed_accountant]

Not anymore. Check the IRS employer publications. Years ago there was a rule if exemptions were greater than 10 you would report it to the IRS but not anymore...

[jainen]

>>Check the IRS employer publications<<

The employee is not allowed to claim more than the number of allowances determined on the W-4 worksheet. This uses filing status, number of allowed exemptions on the actual tax return, number of jobs subject to withholding, and expected deductions and credits. Genuine numbers only. According to Pub 15, the employer can not accept the W-4 if the employee "indicates in any way it is false." If the employee refuses to submit a valid W-4, the employer must withhold at single-zero.

[michaelmars]

not always so simple for an empoyer to determine, how do i know if my staff is supporting and claiming their moms and dads, and truthfully, its none of my business. Once in a while you do get a letter from the irs that states you should ignore any w-4 files and withhold as per the letter but otherwise i accept the w-4's

[jainen]

>>how do i know<<

You know if the employee tells you. What I left out of my reference to Pub 15 is that it only matters if the employee tells you before you accept it. Or, as you mention, if the IRS tells you.

[JohnH]

Pub 15 is so informative.

Very helpful info if the employee hands you a W-4 and says "Here ya go, but it's false."

I've never understood why they eliminated the requirement to send in W-4's claiming more than 10 exemptions. Even if the IRS didn't follow up on them (or only followed up on a small number of them) the mere threat that they would be scrutinized would deter some cheating.

I'd set the cutoff at 8, plus require that the worksheet accompany the W-4 when the threshhold is exceeded.

[kcjenkins]

Now the IRS has the computing ability to match these up themselves, so they no longer ask that they be sent in, as it's just more paper for them to deal with. I would not worry about it, if there is an issue it is the employee's problem not yours. Unless you know for a fact that the amount is wrong, which is almost impossible, don't dwell on it. Sometimes the reason for the large number is something the employee does not want to discuss with you, like big loss carryovers, medical bills, etc. Don't let it be an issue, it's not your job to be their 'Daddy' anyway .