Problem: Employees try to increase their take-home pay by handing in a new W-4 with more withholding allowances or by claiming exempt from withholding.
Solution: Tell employees that you are not required to post the new W-4 until the first payroll period ending on or after the 30th day from the date the new W-4 was submitted (see IRS Circular E). This is the most time that the law allows.
Example: Joe is paid on the 15th and 30th of each month. On September 10, he gives you a new W-4. The September 10th withholding changes must be applied to his paycheck of October 15, the first payroll period following September 30.
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