An employee must complete Internal Revenue Service (IRS) Form W-4 so the employer can withhold the correct amount of federal income tax from the employee’s pay. If too little is withheld, the employee will generally owe tax when filing their tax return, and may owe a penalty. If too much is withheld, the employee will generally be due a refund. Form W-4 is also known as the Employee’s Withholding Certificate or the Employee’s Withholding Allowance Certificate.
An employee should complete a new Form W-4 when changes to their personal or financial situation would change the entries on the form. An employee may claim exemption from withholding if the employee meets both of the following conditions: (1) the employee had no federal income tax liability in the current year and (2) the employee expects to have no federal income tax liability in the following year.
A nonresident alien subject to wage withholding must give their employer a completed Form W-4 to enable the employer to calculate the amount of income tax to withhold. In completing the form, nonresident aliens performing services in the U.S. should use the following instructions instead of the instructions on Form W-4:
• Check only Single marital status on line 3 (regardless of actual marital status).
• Claim only one withholding allowance on line 5, unless the employee is a resident of Canada, Mexico, South Korea, a U.S. national, or a student or business apprentice from India.
• Do not claim Exempt withholding status on line 7.
• Write Nonresident Alien or NRA above the dotted line on line 6 of Form W-4.
In Texas, as in all states, employees must complete IRS Form W-4 so employers can withhold the correct federal income tax from their paychecks. If an employee does not have enough tax withheld, they may owe tax and potentially a penalty when filing their tax return. Conversely, if too much is withheld, they may be due a refund. Employees should update their Form W-4 when their personal or financial circumstances change in a way that would affect their tax withholdings. Employees can claim exemption from withholding only if they had no federal income tax liability in the previous year and expect none in the current year. Nonresident aliens in Texas must follow specific instructions when completing Form W-4: they should select 'Single' marital status regardless of their actual status, claim only one withholding allowance (with exceptions for certain residents of Canada, Mexico, South Korea, U.S. nationals, or students/business apprentices from India), not claim exempt status, and write 'Nonresident Alien' or 'NRA' on the form. These regulations are consistent with federal tax law and apply to all employers and employees in Texas.
