All new employees need to fill out Form W-4, Employee’s Withholding Allowance Certificate once they are hired. Filling out the form accurately is the responsibility of the employee, and the employer must accept the completed form as it is filled out. If an employer does not receive a completed Form W-4 from an employee, they are authorized to withhold federal income tax at the Single – No Deductions rate.
Filling a W-4 out incorrectly, can mean employees have unexpected tax liabilities at the end of the year, so encourage them to take their time and follow the instructions carefully.
What is a W-4?
Form W-4 asks new employees to enter information about their family and calculate how many withholding allowances they plan to claim. As an employer, you use the number of allowances to accurately calculate how federal income tax to withhold. A W-4 should be filled out by all employees when they are hired, or whenever their financial situation changes. For instance, some employees may want to fill out a new W-4 if they work a second job, get married, have a child, or get divorced.
Each employee will need to determine the number of allowances and enter those allowances on their W-4. Allowances include:
- One allowance for themselves
- One allowance if their filing status is Married filing Jointly
- One allowance if they file as Head of Household
- One allowance if they are: Single or Married filing Separately; Married filing Jointly and their spouse doesn’t work; or wages from a second job or spouse’s job are less than $1,500
- Additional allowances based on other dependents
It’s important that employees complete the worksheet(s) included with Form W-4. It will help them to fill out the form accurately and not have too much — or too little — tax withheld. There is also an option to have additional tax withheld, which can be helpful if the employee is married and both spouses work full time or the employee has two jobs.
Employer instructions for filling out a W-4
As an employer, you can answer general questions about W-4s, but you do not fill out the form for your employee, nor can you provide them with suggestions on what allowances they should claim.
Boxes 8, 9, and 10 are the only boxes that should be filled out by the employer, and only then if the W-4 is being used to report new hires.
- Box 8 — enter your business name and address
- Box 9 — enter the first day of the employment for the employee
- Box 10 — enter your company’s EIN
When should it be filed?
Form W-4 should be filled out by every new employee preferably on their first day of employment, but no later than their first week. You do not need to file your employees’ W-4 forms with the IRS, but they should be kept on file with other personnel records for a minimum of four years.
W-4s, like Form I-9, should be included in all new employee onboarding and filled out the first day of employment. Payroll software providers often offer options for the employee to complete this paperwork entirely online — and often before their first day so you can get to training right away.