W4 Form
W4 Form
What is a W-4 Form?
W4 Form is filled when a new hire begins a job; several forms must be completed by both the employer and the employee to manage the tax obligations. The W-4 is one of the more frequently filed forms by fresh hires. This form supports an employer in estimating the appropriate amount of federal income tax to withhold from employees’ compensation.
The Form W-4 (known as an Employee's Withholding Allowance Certificate) is for employees to inform the employer about their tax situation. This paper provides employers with guidance on how much tax withholding to make based on several factors, including the number of dependents and allowances, marital status, tax type, and filing status. Accordingly, employers automatically deduct a sum from each stipend and submit it to the IRS to administer the workers’ lawful income obligations.
W-4 form is important since it guarantees workers deposit the accurate amount of tax(es). Importantly, your employees should declare and record the true amount they have earned and paid in terms of tax(es). The W-4 is required for employers to deduct the correct amount since you are legally required to handle and manage these deductions. When W-4s are appropriately completed, employees may maximize their pay by considering the anticipated credits and deductions. It is pertinent to mention that W-4 gives your workers control over their income and tax information with every new job.
What information is included in the W4 form?
The W-4 form includes several key information:
- Personal information: name, address, filing status
- Details about additional jobs or a working spouse
- Claims for dependents and other credits
- Optional adjustments for self-employment income and extra withholdings
- Employee's signature and date
- Employer's organization name
- Employer identification number (EIN)
When to fill W4 form?
Employees should complete their W-4 form to ensure that taxes are correctly withheld and paid. Within thirty days of receiving the W-4, firms must apply the new wage deductions mandated by the IRS. Should an employee neglect to submit a revised W-4 for the current fiscal year, the employer should cut the withholding amount specified on the previous financial year’s form. If new hires are single, employers must withhold taxes from workers’ salaries, if employees fail to file a W-4 form.
If an existing employee's life significantly changes like financial status etc., the employee must also complete a new W-4. These modifications may include:
- Getting married
- Being divorced
- Having a child
- Changing jobs
Employers should request employees to complete a new W-4 form upon reporting any changes in the employees’ status, to adjust the tax withholdings accurately.
It may also be necessary for some employees to modify their tax withholding. This may be because:
- Employees are making more money from their non-wage income than they had projected
- They paid more than they had to or received a sizable tax refund
- They aim to make a significant purchase, such as a new home
Organizations are required, by law, in several states to keep employees’ W-4s on file for at least four years, as per IRS regulations. Businesses may retain employees’ W-4 forms electronically or in print format.