February5, 2018

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Office Memorandum

Date:February 5, 2018

To:Agency Payroll and Human Resources Staff

From:Mary Muellner, Director, Statewide Payroll Services

Subject:Deadlines for Tax Exempt Status Employees

This bulletin has two purposes:

  1. Notify agencies of changes to the federal deadline to claim exempt, and
  2. Provide a reminder of the other upcoming deadlines for employees who wish to continue their state tax withholding exemption and/or reciprocity status without interruption for 2018.

Claim Exempt from State Withholding

The deadlines for claiming exempt from state tax withholding remain unchanged. An effective-dated state tax withholding record must be entered no later than close of business, February 8, 2018in order for employees to maintain their exempt status without interruption. The record’s effective date must be after December 31, 2017, and no later than February 8, 2018. (The deadline to enter these transactions in Self Service is Thursday, February 8, 2018.)

The state tax status of any employee who filed for exempt status on Form W-4 in the year 2017, but did not refile for 2018, will be reset to SINGLE (marital status) and ZERO (withholding allowances) with an effective date of February 15, 2018. The new tax status will be reflected beginning with the paycheck dated February 16, 2018.

Note: Employees who claim to be exempt from Minnesota withholding and choose not to use Self Service for updating their tax withholding are required to complete Form W-4 and/or Form W-4MN.

FOR 2018 ONLY: Special Guidance for Employees Claiming Exempt from Federal Withholding

The Internal Revenue Service (IRS) has temporarily extended the deadline to claim exemption from federal income tax withholding for 2018 until February 28, 2018.

The IRS will be providing additional 2018 tax guidance, including an updated 2018 Form W-4 and an IRS tax calculator. We will notify you as information becomes available. Employees can continue to use the 2017 Form W-4 until 30 days after the 2018 Form W-4 is released.

SELF SERVICE: Claim Exempt from Federal Withholding

If an employee has already claimed exempt for 2018, no further action is needed. For employees who have not yet claimed exempt from withholding and use Self Service, they should update their federal tax withholding record in Self Service following the usual procedure.

  • An effective-dated federal tax withholding record must be entered no later than close of business February 22, 2018 in order for employees to maintain their exempt status without interruption.
  • The record’s effective date must be after December 31, 2017, and no later than February 22, 2018.
  • For employees who DO NOT refile by this deadline, tax records will be reset to SINGLE (marital status) and ZERO (withholding allowances) with an effective date of March 1, 2018. The new tax status will be reflected beginning with the paycheck dated March 2, 2018.

Note: Employees who claim to be exempt from federal withholding and choose not to use Self Service for updating their tax withholding are required to complete Form W-4.

PAPER FORM: Claim Exempt from Federal Withholding

Employee Instructions
  • If an employee has already submitted a paper Form W-4 claiming exemption from federal withholding, the employee will need to submit another paper 2017 Form W-4, modified as described below.
  • Employees should modify the paper 2017 Form W-4 by one of two ways:
  • Striking “2017” in the text on Line 7 of the Form W-4 and entering “2018” in its place and signing the form in 2018.
  • Entering “Exempt 2018” on Line 7 of the 2017 Form W-4 and signing the form in 2018.
  • The modified paper 2017 Form W-4 must be received by the agency no later than close of business, February 21, 2018.
  • For employees who DO NOT refile by this deadline, tax records will be reset to SINGLE (marital status) and ZERO (withholding allowances) with an effective date of March 1, 2018. The new tax status will be reflected beginning with the paycheck dated March 2, 2018.
Agency Instructions
  • If you already received a paper Form W-4 from an employee, you need to ask for another one from the employee that follows the procedures for appropriately marking the Form W-4.
    IMPORTANT! The agency CANNOT mark up the employee’s existing paper Form W-4 for the employee to meet the IRS requirements.
  • Valid paper 2017 Form W-4s must be modified by the employee in one of two ways:
  • Striking “2017” in the text on Line 7 of the Form W-4 and entering “2018” in its place and signing the form in 2018.
  • Entering “Exempt 2018” on Line 7 of the 2017 Form W-4 and signing the form in 2018.
  • An effective-dated federal tax withholding record must be entered into SEMA4 no later than close of business February 22, 2018 in order for employees to maintain their exempt status without interruption.
  • The record’s effective date must be after December 31, 2017, and no later than February 22, 2018.
  • For employees who DO NOT refile by this deadline, tax records will be reset to SINGLE (marital status) and ZERO (withholding allowances) with an effective date of March 1, 2018. The new tax status will be reflected beginning with the paycheck dated March 2, 2018.

Claim Reciprocity Exemption from Minnesota Withholding

The deadlines for claiming reciprocity exemption from Minnesota withholding remain unchanged. For Michigan and North Dakota residents who work in Minnesota:

  • An effective-dated Minnesota tax withholding record for reciprocity must be entered no later than close of business, February 22, 2018in order for employees to maintain their reciprocity status without interruption. The record’s effective date must be after December 31, 2017, and no later than February 22, 2018. (The deadline to enter these transactions in Self Service is Thursday, February 22, 2018.)
  • The Minnesota state tax status of any employee who filed for exempt status on Form MWR in the year 2017, but did not refile for 2018, will be reset to reflect the same tax status appearing on the employee's most recent federal tax record with an effective date of March 1, 2018.The new tax status will be reflected beginning with the paycheck dated March 2, 2018.

Agency and Employee Responsibilities

It is the agency’s responsibility to notify employees of the deadlines for refiling in order to maintain their exemption and/or reciprocity status without interruption. It is the employee’s responsibility to either enter the appropriate records in Self Service, or submit paper forms to agency staff for processing by the deadlines. Records entered by employees in Self Service will display for agency staff on the Employee Tax Data pages; and similarly, records entered by agency staff will display for employees in Self Service.

Refer back to the memo dated December 4, 2017, Payroll Tax Withholding & Refiling for Calendar Year 2018, for accompanying information. HR/Payroll staff should remember that it is critical to add a new row and select the correct value in the Source Documents field on the Federal Tax Data page when entering employee tax information. The correct value for this field is based on the withholding document(s) submitted by the employee. To ensure that you select the correct value in the Source Documents field, refer to SEMA4 Help.

Helpful Reports

Before the refiling deadlines, the following reports will help identify employees who may need to refile:

  1. Reports identifying employees who already filed:
    These SEMA4 On-Demand reports identify employees who have filed exempt from Minnesota tax withholding (MWR) and/or exempt from state or federal tax withholdingwith an effective date fromJanuary 1 of the current year throughthe date the report is created.
  • FIHU2442 – Employees Who Have Filed a State MWR
    Lists employees who filed an MWR for the current year.
  • FIHU2443 – Employees Who are Claiming Exempt from Federal Withholding
    Lists employees who filed exempt from Federal tax withholding for the current year.
  • FIHU2444 – Employees Who are Claiming Exempt from State Withholding
    Lists employees who filed exempt from state tax withholding for the current year.
  1. Report identifying employees who must refile:
    When the reports are run after January 1, they can be used in conjunction with the FIHR8050, Employees Who Must Refile W-4 and/or Reciprocity Form – Calendar Year 2018(Document Direct/InfoPac ID HP8050), to identify those employees who have not refiled.

After the refiling deadlines, the following reports will be available to assist agencies in identifying which employee records were reset:

  • FIHR8030, W-4 Tax Exempt Reset Report – Calendar Year 2018
    (DocumentDirect/InfoPac ID HP8030), will be available on Friday, February 23, 2018.
    This report lists employees whose federal and/or state tax records were reset because they filed for exempt status on Form W-4 in the year 2017, but did not refile for 2018.
  • FIHR8040, Minnesota MW-R Tax Exempt Reset Report – Calendar Year 2018
    (DocumentDirect/InfoPac ID HP8040), will be available on Friday, February 23, 2018.
    This report lists employees where only the Minnesota state tax record was reset because they filed for exempt status on Form MWR in the year 2017, but did not refile for 2018.

Questions?

Agency Payroll and Human Resources staff should contact Jennifer Goossen at 651-201-8072 or there are questions.