W-4 Form when Exempt Payroll error messages

cottagecharm11 · ‎March 9, 2022

I have been exempt from paying State, Federal, and FICA taxes due to Notice 2014-7 Since 2017. I filled out my new W-4 Form exactly the same as I always done, by entering "Exempt" under line 4C. The state payroll worker is getting the following error message. "Invalid filing status not allowed with exempt flag of Y." She emailed me the following message.

"She will need to fill out a different w4, correctly and resubmit. If she is unsure of how to complete her W4 for the exempt claim, she will need to contact a tax consultant" regarding this." Since payroll is refusing to fix the issue and help me, does anyone know what the person working in payroll is doing wrong?

rjs · ‎March 9, 2022

I'm just guessing here because we don't know anything about the software that the payroll department is using. It's possible that the problem is with the software, not the payroll worker. The error message is complaining about the filing status, but it's not clear whether the message means that the filing status that was entered can't be used with exempt, or that an invalid filing status was entered. We don't know how the payroll worker enters the filing status in the software, or what, if anything, she entered.

Did you check one of the boxes for filing status on the W-4? I know the instructions say that you don't have to if you are exempt, but maybe the payroll software insists on having a filing status, even though it doesn't matter with exempt. If you didn't check a box for filing status, try resubmitting the W-2 with a filing status checked. It doesn't matter which one you choose, because the filing status only affects the calculation of the withholding, and you are not having any tax withheld. The filing status on your W-4 does not have to match the filing status on your tax return.

If you did check a filing status, try resubmitting the W-4 with no box checked for filing status. Point out to the payroll worker that the W-4 instructions say to not select a filing status if you are claiming exempt. The instructions for claiming exempt say to complete 1(a) and 1(b), but not 1(c). If not choosing any filing status doesn't work, try choosing a different filing status. Or tell the payroll worker to try every filing status, including no filing status, until she finds one that the software will accept.

If none of the filing status options work, the payroll department will have to contact their software vendor to find out exactly what the error message means, and how to enter an exempt W-4.

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rjs · ‎March 9, 2022

I'm just guessing here because we don't know anything about the software that the payroll department is using. It's possible that the problem is with the software, not the payroll worker. The error message is complaining about the filing status, but it's not clear whether the message means that the filing status that was entered can't be used with exempt, or that an invalid filing status was entered. We don't know how the payroll worker enters the filing status in the software, or what, if anything, she entered.

Did you check one of the boxes for filing status on the W-4? I know the instructions say that you don't have to if you are exempt, but maybe the payroll software insists on having a filing status, even though it doesn't matter with exempt. If you didn't check a box for filing status, try resubmitting the W-2 with a filing status checked. It doesn't matter which one you choose, because the filing status only affects the calculation of the withholding, and you are not having any tax withheld. The filing status on your W-4 does not have to match the filing status on your tax return.

If you did check a filing status, try resubmitting the W-4 with no box checked for filing status. Point out to the payroll worker that the W-4 instructions say to not select a filing status if you are claiming exempt. The instructions for claiming exempt say to complete 1(a) and 1(b), but not 1(c). If not choosing any filing status doesn't work, try choosing a different filing status. Or tell the payroll worker to try every filing status, including no filing status, until she finds one that the software will accept.

If none of the filing status options work, the payroll department will have to contact their software vendor to find out exactly what the error message means, and how to enter an exempt W-4.