(1) For purposes of determining the employee's withholding allowances, the amount claimed for Montana may be different than the amount claimed on the federal Employee's Withholding Allowance Certificate (Form W-4), reported on the line stating "total number of allowances you are claiming," furnished by the employee to the employer for federal withholding tax purposes. The department may determine whether the amount claimed on the federal Form W-4 should be adjusted for state withholding purposes. The department does not provide a separate form for this purpose. The department has determined that the federal child tax credit that allows extra allowances for federal withholding is not allowed for Montana purposes when determining the number of allowances for Montana withholding.

(2) Exempt status claimed for federal purposes does not exempt an employee's wages from withholding requirements for Montana purposes.

(3) If an employee fails or refuses to provide the number of allowances on federal Form W-4 reported on the line stating "total number of allowances you are claiming," the employer shall withhold, for Montana purposes, on the basis of zero withholding allowances.

(4) Any change to the "total number of allowances you are claiming" on federal Form W-4 for federal purposes, including federal redeterminations of allowances, automatically changes the number of allowances for Montana purposes unless the allowances have been set at a maximum number by the department under (5). If a redetermination allows extra allowances for the federal child tax credit for federal purposes, these extra allowances will not be allowed for state purposes.

(5) For any federal Form W-4 on which an employee has claimed more than ten withholding allowances, the following apply:

(a) The employer must provide the department with a copy of the federal Form W-4 no later than the last day of the payroll period during which the employer received the form to the following address:

 

Department of Revenue

P.O. Box 7149

Helena, Montana 59604-7149.

 

(b) The department may revise the number of withholding allowances claimed to a maximum allowed for state tax purposes.

(c) The employer shall continue to withhold based on the most recently filed federal Form W-4 with fewer than 11 allowances claimed. If no Form W-4 with fewer than 11 allowances has been filed, the employer shall withhold for Montana purposes on the basis of zero withholding allowances.

(d) If upon review the department determines that the federal Form W-4 provided is defective, the department may require that the employer disregard the allowances claimed and advise the employer in writing of the maximum number of withholding allowances permitted the employee for state tax withholding purposes.

(e) The filing of a new federal Form W-4 by an employee whose withholding allowances have been set at a fixed maximum number by the department shall be disregarded by the employer unless a number equal to or fewer than the set maximum is claimed or written notice by the department is given authorizing a different maximum.

(6) When adjusting claimed withholding allowances for an employee under (5), the department shall consider:

(a) exemptions provided under 15-30-2114, 15-30-2115, and 15-30-2116, MCA;

(b) marital status and number of employers;

(c) estimated wages and salaries;

(d) estimated allowable deductions under 15-30-2111, 15-30-2131, 15-30-2132, and 15-30-2133, MCA, to the extent that such deductions exceed the average itemized deductions taken into account in the withholding tables;

(e) business losses;

(f) annuity plan contributions;

(g) residency; and

(h) federal Form W-4, personal allowances worksheet.

(7) If the department does not have sufficient information to determine the maximum number of permitted allowances in (5), the department shall use its best estimate of the employee's eligible exemptions when determining the withholding allowances.

(8) Employers shall provide a copy of an employee's federal Form W-4 upon request by the department, at any time, for the purposes of state tax administration.