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The DE 4 is used to compute the amount of taxes to be withheld from your wages, by your employer, to accurately reflect your state tax withholding obligation.

My question is, do employers simply use this as a guide to determine the amount to withhold from employees paychecks? Or do they actually submit this form to the CA government?

Let me give a concrete example.

Employee Adam gets hired at XYZ corp. He fills out a DE 4 form and marks himself exempt (because he did not owe any wages last year, and expects to owe none this year).

Does XYZ corp ...

  1. Send the DE 4 form to CA government? ... or
  2. Not send the DE4 form to CA, and only use it themselves as a reference for remembering to not withhold any tax when they cut paychecks to Adam
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  • Why would it matter to you?
    – littleadv
    Commented Apr 3, 2023 at 20:06
  • @littleadv Long answer... I work for a company based in California. I work remotely, in a state that does not collect state taxes. There was a brief period of time where I resided in CA (onboarding, training) and so I paid taxes for that 1 month. I then marked myself exempt from CA state taxes after I moved away, so that employer would stop withholding taxes (their address update process takes much longer, and I wanted my full paycheck). I just want to know what the implications of me marking myself as exempt are. I know CA can be aggressive with tax collection
    – James Wierzba
    Commented Apr 5, 2023 at 1:22
  • I worry that CA will see my DE4 submission with tax exemption but think I was still living in CA and avoiding taxes and send me a bill. I am only worried about this because a co-worker had a similar thing happen to him and he did get a tax bill and he fought it and won but I don't want to have to do that
    – James Wierzba
    Commented Apr 5, 2023 at 1:29
  • So based on your answer below, I guess the answer would be: unknown if the employer submitted the DE4, but the employer surely reported 0$ withholding for X time (X being the time between me updating the address and them recognizing it and stopping CA withholding, which I assume also means they stop reporting to CA)
    – James Wierzba
    Commented Apr 5, 2023 at 1:30
  • You'll still need to submit the non-resident return to CA, which should reconcile your withholding. You should not have reported "exempt" because you will in fact owe CA taxes this year (for that period of training) and you for sure will owe Federal income tax. So if CA FTB decides to audit you and pull this certificate from the employer, you may end up in trouble for no reason. Remember, it's not the crime, it's the cover up. You may end up not owing any taxes, but you're on the hook for a felony perjury.
    – littleadv
    Commented Apr 5, 2023 at 2:34

1 Answer 1

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According to the CA Code of Regulations Title 22 section 4340-1, the FTB and EDD (Franchise Tax Board and Employment Development Department, respectively) can demand that an employer provide the DE-4 under "necessary" circumstances (subsection (e)).

Subsection (c) of the same section says that if your W-4 and DE-4 both meet reporting requirements, your W-4 to the IRS satisfies the state reporting requirement as well. It doesn't say if your company can elect to send your DE-4 even if not required (which they may do if it's allowed, just so they don't have to check every form for compliance). If one or the other doesn't conform, the DE-4 must be filed with the EDD.

Your withholding amounts, regardless of whether your DE-4 is sent to the EDD, is reported quarterly. So in any event, the FTB/EDD/IRS will know exactly how much has been withheld from your pay. If your concern is with them having other information, they're going to have all of that as well, whether from the DE-4 or from other documents. If you're concerned with the "under the penalties of perjury" part, just don't go crazy with intentionally underwithholding. The W-4 and DE-4 forms are commonly adjusted in an attempt to get more accurate withholding (even if it means making an "untrue" selection).

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  • 1
    More to the point, the DE4/W4 are used by the employers to cover their own a$$ets if an employee tries to shift blame/penalties for underwithholding, they will not hesitate to pull the form out if needed to prove that it's your fault (the OP).
    – littleadv
    Commented Apr 3, 2023 at 20:24

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