Hi Rita - this is an old post but I know I am missing something hoping you can help to confirm.  So for employees working less than a year (starting in the middle or quit in the middle of the year), why can't we take their gross income minus $3500 x 0.0495?  Do you mean that if she starts on July 1st of the year, she is only allowed to exempt 1/2 of $3500?

 Hi Rita - this is an old post but I know I am missing something hoping you can help to confirm.  So for employees working less than a year (starting in the middle or quit in the middle of the year), why can't we take their gross income minus $3500 x 0.0495?  Do you mean that if she starts on July 1st of the year, she is only allowed to exempt 1/2 of $3500?