Federal & State Withholding Exemptions

The great majority of employees of the City of New York are required to have taxes withheld; however, certain situations exist that entitle an employee to be fully tax exempt.

No employees, including students, are automatically exempt from tax liability. To claim exempt status, you must meet certain conditions and submit a new certificate and signed Withholding Certificate Affirmation each year. You cannot claim exemption from federal withholding taxes for 2017:

  • If your income exceeds $1,050 and includes more than $350 of unearned income (interest and dividends), and
  • Another person can claim you as a dependent on his or her tax return.

If you are exempt from federal withholding taxes, you must certify on the W-4 form that you meet both of the following conditions:

  • Last year you had a right to a refund of ALL federal income tax withholding because you had no tax liability, and
  • This year you expect a refund of ALL federal income tax withheld because you expect to have no tax liability.

To claim exemption from New York State and City withholding taxes in 2017, you must be able to certify the following conditions in writing:

  • You must be under age 18, or over age 65, or a full-time student under age 25; and
  • You did not have a New York income tax liability for 2016; and
  • You do not expect to have a New York income tax liability for 2017.

Generally, as a resident, you are required to file a New York State income tax return if you are required to file a federal income tax return, or if your federal adjusted gross income plus your New York additions is more than $4,000, regardless of your filing status. However, if you are single and can be claimed as a dependent on
another person’s federal return, you must file a New York State return if your federal adjusted gross income plus your New York additions is more than $3,100.

If you meet the criteria for state exemption, file an IT-2104-E Certificate of Exemption from Withholding instead of the IT-2104 form.

Forms claiming full exemption from withholding expire each year. If your exempt status continues, you need to submit new forms annually. You must file a new W-4 form by February 16 to continue to claim full exemption from federal taxes and/or a new IT-2104-E form by April 30 to continue to claim full exemption from state and city taxes. You must submit the Withholding Certificate Affirmation with your withholding certificate each year.

If you do not submit new forms to your agency to continue to claim full exemption, taxes will be withheld as if you were single with zero allowances until new acceptable forms are submitted.

Get the IT-2104-E Certificate of Exemption from Withholding form.