What happens if the income of an individual who filed an upfront exemption certificate exceeds $12,000 during the calendar year?
If that person’s earned income from the primary employer exceeds $12,000 or the municipality’s tax collector informs the employer that the employee’s income has reached $12,000, employers “restart” withholding of the LST by withholding: (1) a “catch-up” lump sum tax equal to the amount of tax that was not withheld from the employee as a result of the exemption; and (2) the same amount per payroll period that is withheld from other employees. Except for monitoring when an employee who has filed an exemption certificate earns more than $12,000, the intent of the amendment is that employers are not responsible for investigating exemptions, monitoring tax exemption eligibility or exempting an employee from the tax.
A. If that individuals earned income and net profits from the primary employer exceeds $12,000 or the municipalitys tax collector informs the employer that the employees income has reached $12,000, employers “restart” withholding of the LST by withholding a “catch up” lump sum tax equal to the amount of tax that was not withheld from the employee as a result of the exemption. Subsequent withholdings should equal the same amount per payroll period that is withheld from other employees who did not file an upfront exemption. Q. What other exemptions are provided for in Act 7? A. In addition to the low income exemption, exemptions are provided for individuals who are secondarily employed and whose primary employer is withholding the $52 annual tax liability, for members of a reserve component of the armed forces during anytime he or she is called to active duty (not inclusive of annual training requirement), and to honorably discharged veterans who served in any war or armed conflict who a
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