W4 Exempt Status – Stop Federal Tax Withholding

Federal income tax withholding is mandatory, but what if you’ve withheld enough taxes so far? There isn’t really a point in you paying federal income taxes in that case. 

Luckily, you can claim exempt status on Form W-4 to let your employer know that you don’t need to pay any more federal income taxes. Here is how to claim exempt status on Form W-4, Employee’s Withholding Certificate or previously known as the Employee’s Withholding Allowance Certificate.

Claiming exempt status on W-4

There is nothing special needed to claim exempt status on Form W-4. As usual, you start filling it out, entering your personal information and then writing down exempt spaces between certification and Step 4(c).

Once you enter exempt and your personal information, including your filing status, you sign it, and that’s it. From the next paycheck to the time you file a new Form W-4, your employer won’t withhold any federal income tax on your paychecks. 

However, this isn’t something you should keep once the tax year ends. For example, if you’ve claimed exempt status in August, you should file a new Form W-4 and normally let your employer withhold tax. This is important as you might be subject to underpayment penalties if you don’t pay any federal income taxes for a few months.