Procedures for filling out state withholding forms vary by jurisdiction; for instance, Alabama employees who qualify for personal exemptions should enter 1 on line 1 of form A-4, while married employees in Arkansas, who are eligible for two exemptions, should input 2 on line 1 of form AR4EC, states Intuit. Employees who qualify for exemption from the California withholding tax should submit federal form W-4 as evidence.
Most states levy personal income taxes that they require employers to withhold from their employee's pay, explains BizFilings. Most jurisdictions allow employers to utilize the same methods they use to compute federal withholding tax rates to determine the right amount of tax to withhold from their employee's paychecks. For exemptions, most states provide documents analogous to the federal form W4.
A number of states have reciprocal withholding tax agreements, according to Intuit. For instance, Michigan, Wisconsin, Iowa and Kentucky have reciprocal agreements with Illinois, notes Intuit. For this reason, residents of, say, Iowa, who work in Illinois should claim an exemption from the Prairie State's personal income taxes by submitting form IL-W-5-NR to their employers.
Unlike the majority of states, Florida, Wyoming, Nevada, Alaska and Washington do not charge personal income taxes, notes BizFilings. Other states that do not levy these taxes are Texas and North Dakota. Other outliers are New Hampshire and Tennessee, which charge personal income taxes on interest and dividend income only.