Section 15: WITHHOLDING EXEMPTION AND ALLOWANCES


(a) General

Each new employee must furnish a signed Federal Form W-4 or W-4A on commencement of employment. A Federal form W-4 or W-4A filed by a new employee is to be made effective upon the first payment of wages. If an employee fails to furnish a certificate, you must withhold tax as if the employee is a single person who has no withholding allowances.

An employee is entitled to the same number of withholding allowances as he or she is entitled to for Federal Income Tax withholding purposes. Thus, an employer may rely upon the number of Federal withholding allowances claimed by the employee. However, due to the difference between Federal and State deductions and credits, it may be necessary for an employee to claim either an additional number or a lesser number of withholding allowances for State purposes if the estimated withholding from the employee’s wages would not result in an amount substantially equivalent to the tax reasonably estimated to be due from the employee. In such cases, the employee shall file Federal Form W-4/W-4A, or equivalent provided by the employer, and indicated separately the number of allowances claimed on said Form " for State of Delaware Purposes".

There are two methods for estimating the number of withholding allowances for state taxes. The more detailed method requires a State Form SD/W-4Aor W-4NR for non-residents, in essence a " pro forma W4 or W-4A". It is offered only as a worksheet for determining the appropriate number of Delaware withholding allowances for those who believe their tax computation is complicated by non-wage income and substantial deductions. It is not required of Delaware wage earners; nor is it required to be in files of employers. Copies of the worksheet they are available from the Division’s Taxpayer Services office or by calling (302) 577-8779 and may be subsequently reproduced by the employer.

In lieu of the worksheet method, there is a practical and convenient rule of thumb for individuals who wish to compute separately the number of withholding allowances for federal and state taxes. Starting with the number of personal exemptions to be claimed on the tax return itself, the state computation is as follows:

  1. For each $2,000 by which your itemized deductions, net of state income taxes paid, exceed the $3,250 standard deduction, take one additional allowance.

  2. For each $2,000 of non-wage income that you expect to receive, take one fewer allowance.

(b) Employees Claiming 14 or More Allowances

Employers receiving withholding exemption certificate (Federal form W-4 or W-4A), shall be required to send a copy of such certificate to the Division of Revenue within 5 working days, providing that either of the following is claimed by an employee:

(1) The total of allowances claimed for Delaware Personal Income Tax purposes on the certificate exceeds fourteen (14) or

(2) The certificate indicated that the employee claims to be exempt from withholding of Delaware Income Tax and the employer reasonably expects the employee’s wages to exceed $168.50 per week.

Copies of these exemption certificates shall be mailed to: Assistant Director, Office of Personal Income Taxes, Division of Revenue, P.O. Box 2044, Wilmington, DE 19899-2044

Pending receipt of notice from the Division of Revenue, with respect to a copy of any certificate submitted, the employer shall withhold on the basis of the statements in the certificate. If the Division of Revenue finds that the certificates submitted contains materially incorrect statements or, after seeking verification from the employee, determines that it lacks sufficient information to find that the certificate is correct, and so notifies the employer, then the employer shall consider the certificate defective and shall withhold amounts from the employee as if the employee were a single person claiming no withholding allowances. The employer shall notify the employee of this action taken by the Division of Revenue and request that the employee file another withholding exemption certificate.

Withholding of Personal Income Tax for Non-Residents