What is the difference between exempt from withholding and exempt from taxes?

There are two ways to claim exempt:

  • An employee who claims exemption from withholding is claiming they should not have withholding for that tax, but they may still have to pay the tax at the end of the year. Their employer should still report their wages.

    Zenefits Payroll supports marking employees as exempt from withholding only, but only for Federal Income Tax.

  • An employee who claims exemption from taxes for a particular tax is claiming they should not have withholding because they will not have to pay that tax at all. Their employer should not report their wages. Aside from Federal Income Tax as notated above, this is the only type of exemption that Zenefits Payroll supports.

Learn more about what happens when an employee is marked as exempt in Zenefits Payroll.

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