What Are Forms W-4? A Primer for Employers

Posted January 15, 2019 by Justworks in Keeping Compliant
As an employer, the IRS requires you to collect Forms W-4 from all employees. Here are answers to a few common questions about the W-4.

Welcoming a new hire to the office? After showing them the coffeemaker (priorities!), make sure they fill out a Form W-4.

Form W-4 FAQs:

What’s the purpose of the W-4?

The IRS Form W-4 — which should be filled out by all employees — determines how much federal tax should be withheld from an employee’s paycheck every pay period. Employers withhold taxes so that employees won’t be subject to huge bills from the IRS come tax time.

Related Article: What is Employee Expense Reimbursement and How Does it Work?

The IRS calculates how much tax to withhold based on the allowances each employee claims, which take into account how many people an employee supports with his or her income (e.g., dependents). The more dependents an employee claims, typically, the less tax withheld. The IRS also takes into account whether employees are filing jointly or on their own, among other factors.

Get the full guide on how PEOs work for small businesses.

Download Now

What happens if an employee doesn’t fill out a W-4?

If an employee doesn’t submit a Form W-4, the IRS requires you to withhold taxes from them at the highest rate (which likely won’t come as welcome news).

Can I fill out the W-4 for my employees?

No. You can answer an employee’s questions, but can’t fill out the form or influence how they do so. If employees need help determining their withholding allowances, you can direct them to the IRS’s withholding calculator.

Do employees need to update their W-4 forms each year?

The IRS requires employees to fill out a new form upon starting a new job. However, as an employer, it’s helpful to remind employees to provide a new Form W-4 if their personal or financial situation has changed. This will ensure that an appropriate amount of taxes is being withheld from each paycheck.

Related Article: LMNOP...QLE? Your Quick Guide to Qualifying Life Events

What is my responsibility as an employer if too much tax is withheld?

If your employee didn’t claim all the allowances they were entitled to, you cannot repay the tax previously withheld — but you should ensure that the employee fills out a revised W-4 to correct the amount moving forward. If, however, you mistakenly withhold too much tax from an employee’s paycheck, the IRS has rules regarding how employers should return these amounts.

Where can I find the W-4 form?

You can find the latest version of the W-4 along with any relevant updates on the IRS website here.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.