Is this like filing exempt on a W-4?

No, not at all

Filing “exempt” on a W-4 is simply a statement between you and your employer. It doesn’t legally change the taxability of your income. If you’re earning Federal Reserve currency (which nearly everyone does), your income is considered taxable by default—unless and until you take action to reclassify it. Filing exempt on your W-4 without completing the 12-411 process does nothing to protect you from federal tax liability, and you’ll still be expected to explain your income to the IRS at the end of the year. Most people who file exempt do so incorrectly and have no legal foundation for doing so.

The IRS is aware of this and even has a Withholding Compliance Unit that randomly selects people who file exempt. If selected, they can send a letter to your employer requiring them to withhold income taxes at the maximum possible rate for three years, unless you provide legal justification

That’s exactly what the 12-411 process provides—a lawful foundation for claiming exemption. Once you’ve completed the process, your income is legally reclassified as non-taxable. That means you meet the IRS’s official qualifications for exemption from withholding. You’re no longer just checking a box—you’re backed by law.

Here are the IRS’s own instructions for claiming exemption on Form W-4:

Exemption from withholding

You may claim exemption from withholding for 2025 if you meet both of the following conditions:

You had no federal income tax liability in 2024; and

You expect to have no federal income tax liability in 2025.

You had no federal income tax liability in 2024 if:

(1) Your total tax on line 24 on your 2024 Form 1040 or 1040-SR is zero (or less than the sum of lines 27, 28, and 29), or

(2) You were not required to file a return because your income was below the filing threshold for your correct filing status.

If you claim exemption, you will have no income tax withheld from your paycheck and may owe taxes and penalties when you file your 2025 tax retur

To claim exemption from withholding, certify that you meet both of the conditions above by writing “Exempt” on Form W-4 in the space below Step 4(c). Then, complete Steps 1(a), 1(b), and 5. Do not complete any other steps

You will need to submit a new Form W-4 by February 17, 2026.

In summary:

Claiming exempt on a W-4 without completing 12-411 is risky and often incorrect. But once you go through the 12-411 process, you are fully compliant with IRS exemption standards, and you’ll have the documentation to prove it.