We recommend that employees continue to use the number of allowances calculated on their 2017 (or older) Form W-4 for Montana withholding. A newly hired employee should also use the 2017 federal Form W-4 to calculate the number of allowances for Montana.
The IRS recently released a new federal Form W-4, Employee’s Withholding Allowance Certificate, for 2018 to reflect the recent federal tax reform provisions. As a result, employees may revise the number of federal allowances on the new Form W-4, which will reduce the tax withheld from their wages for federal purposes. Montana requests that employees keep using the 2017 federal Form W-4 because the recent federal tax law changes have no impact on the number of exemptions or the amount of standard deductions a taxpayer may claim on the Montana return. Therefore, there is no related reason to change the number of allowances for Montana withholding purposes.
When calculating their withholding allowances, an employee should further consider the following:
- Montana does not allow the federal child tax credit nor the exemption from withholding.
- If more than 10 allowances are reported on an employee’s federal Form W-4, the employer must continue to submit the form to the Department of Revenue for review. If the department determines it is not correct number of allowances for state withholding purposes, we will contact the employee and employer with the revised number. If necessary, employees can then contact the department to justify an increased amount of allowances.
We recommend consulting with a tax preparer to determine if your state taxes are impacted by any of the federal tax changes.