How is the number of employee withholding allowances determined?
A. The number of allowances claimed is set by the employee for both federal and state purposes when the federal Form W-4 form is completed. (Montana does not provide a separate W-4 form). An employee can have a separate W-4 for state purposes. For state purposes, the following special rules apply: • Only line 5 of the federal Form W-4 is used in determining the number of allowances. Employees may elect to have a different number of allowances for federal and state purposes. • Exemption from withholding for federal purposes does not exempt an employee from Montana income tax withholding. Montana does not recognize an “exempt” status on a W-4 form. • If the applicable line on Form W-4 is left blank or has anything other than a number entered on it, the employee is deemed to be claiming “zero” withholding allowances. • Any change to the W-4 form for the Federal Child Tax Credit purposes does not change the W-4 form for state purposes. • An employer is required to provide a copy of any wit
