Employers generally withhold from wages by way of the wage-bracket or percentage method (Code Sec. 3402(b) and Code Sec. 3402(c)). However, an employee may request that the amount of tax withheld by the employer from the employee’s wages be computed on the basis of the part-year employment method (Reg. §31.3402(h)(4)-1(c)(1)). Under this method, an individual who is employed no more than 245 days in the aggregate during a calendar year may request that the employer withhold on the basis of the part-year employment method to prevent overwithholding. Under this method, the amount of tax to be withheld is determined as if the wages paid to a part-year employee were spread evenly over the calendar year, whether or not the employee actually was employed during all of that period.
An employee’s request that withholding be based on the part-year employment method must be in writing and in the form that the employer requires. The request must be sworn and must contain the following information:
- the last day of employment, if any, by any employer prior to the current term of continuous employment during the calendar year in which that term commenced;
- a statement that the employee reasonably anticipates being employed for an aggregate of not more than 245 days in all terms of continuous employment during the current calendar year; and
- a statement that the employee uses a calendar-year accounting period.
There is no specified due date for an employee’s election to withhold using the part-year method. A request by the employee furnished to the employer in proper form may be acted upon by the employer for wages paid after the furnishing of the request. It is effective only for the calendar year in which it is furnished to the employer. The request is not effective for wages paid on or after the beginning of the payroll period during which the current calendar year will end.