FAQs about entering tax information as an employee

Once you've completed onboarding, reach out directly to your administrator to have them make the change in payroll.

If your company uses Zenefits Payroll, then your administrator will enter the exemption using these steps.

Note that if you don't have Zenefits Payroll, you'll need to work directly with your payroll provider to update this for your employee(s). If you use Zenefits Pay Connect sync and an employee changes their tax information in the future, our system may override the tax exempt status in your payroll system.

Nonresident employees with an F-1, J-1, M-1, Q-1, or Q-2 visa can claim exemption from FICA taxes during onboarding

To claim more than 20 allowances for state or federal income taxes as an employee in Zenefits:

  1. Enter 0 and complete onboarding, or click Save (if onboarding is already complete).
  2. Reach out directly to your administrator to have them make the change in payroll.
  3. Then, contact Zenefits Customer Care and provide the number of allowances.

Please note that allowances do not affect FICA withholding. Learn more about claiming exemption from FICA in Zenefits.

You can update the tax withholding and filing status information on your Federal and State W-4s directly in Zenefits in the Tax Info section of the Personal Information app.

  • Click here to enter or update your Federal tax information.
  • Click here to enter or update your state tax information.

There's no need to upload anything. Zenefits will generate a new W-4 when you make changes to tax information.

Note: For any questions on the new W-4, you can learn more here.

Each state has differing guidance on choosing the appropriate number of allowances for state income tax withholding. See this list of state forms for specific instructions in each state. To calculate the appropriate number of federal allowances, see the the IRS Withholding Calculator (or Form W-4).

To specify an additional fixed dollar amount for Federal or state withholding, enter the amount in the Additional Withhold field during onboarding, or afterwards by doing this:

  1. Log in to Zenefits.
  2. Click the Personal Information app on the dashboard.
  3. Click Tax Info on the left side of the page.
  4. Click the edit icon next to Federal Tax Withholding or State Tax Withholding.
  5. Enter the amount of your withholding.
  6. Complete a new signature.
  7. Click Save.

During onboarding, you can enter your state tax filing and withholding information for the state(s) where you live and work. After onboarding, click here to enter or update your state withholding allowances and filing status from the Bank and Tax Info card. If you move to a new state, click here change your home address in the Personal Information card, then update your tax information in the Tax Info section.

Zenefits uses your home address and the address of your work location (which your manager assigns to you) to determine the states for which you should provide tax info. You'll fill out at least the federal W-4, and if your home address and work addresses are:

  • in the same state (and it has state income tax), Zenefits will ask you to enter withholding allowances and filing status for that state. These states have no income tax.
  • in different states, Zenefits will ask for tax information in each state that has income tax. If these states have with a reciprocal agreement in place, you can complete a Certificate of Non-Residence in your work state (and provide it to your administrator), and let Zenefits know you'd like to be taxed solely in your home state.

Each time you make changes to your tax information, you'll need to provide a signature. Once you do, Zenefits will generate a new W-4, which you'll be able to download.

When in doubt, please talk to a tax advisor to determine where you should pay taxes as an employee.

Employees can be exempt from taxes for a number of reasons. Individual situations can differ, but here are a few general guidelines for eligibility for full exemption.

  • Foreign nationals who are working in the US under a F-1, J-1, M-1, Q-1, or Q-2 visa are exempt from paying Social Security or Medicare taxes. They should not have withholding for Social Security and Medicare.
  • Family employees of certain types of businesses are sometimes exempt from particular taxes. For example:
    • Children under 18 who work for their parents may be exempt from Social Security or Medicare and FUTA taxes.
    • Individuals employed by their spouse may be exempt from FUTA taxes.

IRS regulations state that individuals who wish to claim exemption from federal income taxes must meet both of the following criteria:

  • For the prior year, the individual had a right to a refund of all federal income tax withheld because they had no tax liability, and
  • For the current year, the individual expects a refund of all federal income tax withheld because they expect to have no tax liability.

Zenefits does not offer tax advice. Please consult a tax advisor to determine whether a particular employee qualifies for exemption from taxes.

You employer must begin withholding the Additional Medicare Tax (0.9%) from your wages once it has paid you wages in excess of $200,000. If you earned over $200,000 from a previous employer in the same year, you are still responsible for paying the additional tax, but your current employer may not be willing or able to handle these extra withholdings for you.

Contact a tax advisor for more information and instructions on handling the additional withholding. For example, you have the option to make estimated payments if you expect to have any liability for the additional tax, or to request that your current employer withhold additional income tax on Form W-4, which can then be applied to all taxes on your Form 1040.

If you've already met the annual wage base limit for Social Security with a previous employer in a given year, you can contact a tax advisor to recover any excess tax paid on your personal returns.

However, your current employer is still require to withhold and pay Social Security taxes up to the annual wage base limit for wages paid to you, even if you've reached the limit for the year with a prior employer. Employers cannot honor the Social Security wage cap for wages paid to a current employee by a former employer.

How does Zenefits Payroll determine what taxes should be withheld?

Zenefits Payroll uses the home address and work location provided when employees are hired into our system.  Using a process called geolocation, Zenefits Payroll relies on GPS data to identify a precise location for each address. The geolocation data, in combination with Nexus and Reciprocity data, produces the employee's taxation results.


How does geolocation work?
The system normalizes the address by setting it to the US Postal Service standard format, using the proper abbreviations, correcting any spelling errors, and establishing a full zip code (ZIP+4). Once the address is normalized, the system references GPS data to format the address to a precise location in the form of LAT/LONG coordinates. These LAT/LONG coordinates are compared to geospatial jurisdiction data /shapefiles, which are published by the US Census Bureau, as provided to them by the local jurisdictions. The shapefiles can be compared to tax data, resulting in the proper tax requirements, which also takes into consideration both Nexus and Reciprocity.
 
What happens if an employee enters a mailing address instead of the actual address where they live?
Because of the way the geolocation process works, the address entered as the home address will be used to configure the employee's taxation. Employees should always use their true lived-in location and ensure the work location assigned to their profile accurately reflects the place where their work is done. Entering alternative addresses will cause incorrect withholding in payroll.  If you identify an issue with an employee's withholding, see How can I add or correct historical payrolls? for more details.
 
Action Required
If an incorrect address is causing incorrect tax withholding, payroll administrators should make sure the offending address is updated immediately to prevent ongoing taxation errors.

What happens if an employee enters incorrect W-4 information?
As most payroll administrators know well, the federal Form W-4 dictates the Federal Income Tax withholding on each pay run. If an employee has made a mistake while entering their W-4 information (this applies to both Federal or State Forms) into Zenefits, it is likely that the respective withholding will not be as expected.

Payroll administrators should take the following steps when a W-4 entry error is brought to their attention:

  1. Review the actual W-4 signed by the employee. Employees should provide you with a signed W-4on their hire date so you can meet your recordkeeping responsibilities as an employer. It's best practice to ensure that this W-4matches the entries made into the HCM/ Payroll system. If an employee tells you that the W-4entries are incorrect, review the signed copy of the W-4originally provided. If the actual W-4 matches the system entries, then the employee must provide you with a new, updated, and signed W-4 in order for you to update the system. If the actual W-4 does not match the system entries, you can update the system to reflect the completed W-4.

  2. Discuss with the employee any need for adjustments on future payroll runs. Depending on the degree of impact to the employee's withholdings, net pay, or other deduction types, the employee may need your help to make adjustments on future payruns to offset the impact.  This may include reducing or increasing withholding for a single or multiple pay runs, providing an advance for financial hardship, or making one-time adjustments to any other deductions that may have been impacted.

  3. Avoid making corrections to historical payrolls for withholding discrepancies. Adjustments to future runs are more timely, and they prevent the need for systematic taxation adjustments in the past, which can cause discrepancies with the corresponding taxing authorities. The administrative burden of retroactive withholding adjustments is likely greater than the steps entailed to adjust a subsequent payroll.

  4. The IRS and most state agencies don't allow tax and wage statements, and other filings, to be amended only for the sake of withholding adjustments. If the discrepancy is brought to your attention after the tax year is closed and W-2s have been processed, have employees address any discrepancies when filing their personal tax return. You may wish to provide your employee with this IRS link, which provides them with best practices in ensuring their federal tax withholding is correct.

My employee’s address and W-4 data is correct, but the withholding looks wrong.
There are a number of factors that impact the calculation of federal income tax withholding in payroll, in addition to the W-4 data, so determining the accuracy of the calculation also requires review of the following:

  • Taxable income changes: If there are changes in the taxability of gross income on an employee’s paycheck, like adding a special income or even small changes to hours or a salary, the withholding calculation may change.

  • Benefits or other deduction changes: Did the employee max out their 401K or make changes to their medical insurance elections?  These and other pre-tax deduction types impact taxable wages each payroll and income taxes will fluctuate with any changes. Has your employee hit the social security taxation limit?  Sometimes employees see their net pay has changed due to tax calculation changes and assume it’s a fluctuation in federal income tax, but social security tax calculations can change for higher income employees.

  • Bonus Income: Bonuses, commissions, and other income that classifies as supplemental can automatically increase the rate of income tax calculated. See IRS Publication 15 for more details on withholding taxes from supplemental income payments.

The same tax tables used by Zenefits Payroll can be found on the IRS website.  See IRS Publication 15 for details on employer tax responsibilities and current tax tables.  Paycheckcity. com is also a great tool for payroll administrators to double check any suspected calculation discrepancies before attempting to make adjustments for an employee.

State and local income taxes may vary in the calculation methods, but many of the same factors that impact federal tax withholding calculations will also calculations for impact state/local income tax withholding.

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