The District of Columbia is somewhat unique in that an individual needs to be both living and earning a wage within its jurisdiction before a state-level income tax is imposed. This is good to know, but, assuming that one is both living in and earning a wage in D.C., how much should be withheld from each paycheck for state income taxes? Fortunately, there is a very simple form to help employers determine just that.
In addition to the federal income tax withholding form, W4, each employee needs to fill out a District of Columbia State income tax withholding form, D-4. This form has essentially the same information on it, but makes sure you have the proper withholding allowances for state-level withholdings. In some cases, a federal W-4 form can be used in the place of a District of Columbia D-4 form, but it is recommended to have both on file. Both forms are available online here.
Also, non-residents of the District of Columbia that are earning a wage need to fill out a form D-4A stating that they are, in fact, a non-resident and not subject to state withholdings from the District of Columbia.
And finally, please take note! If no income tax withholding form is filled out, taxes must be withheld at the highest level possible – single, no deduction allowances – even if the employee is known to be married. To prevent things like this from happening, I cannot stress the importance of having each employee file a state withholding form D-4 as well as a federal Form W-4 enough, so please make their completion a priority.
