Form W-4

Employee's Withholding Allowance Certificate

All Fields Required

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FORM W-4

Employees are required to complete and submit Form W-4, Employee's Withholding Allowance Certificate, no later than their first day of employment.

With this form on file, the employer can withhold the correct federal income tax from each paycheck.

Tip: employees have the ability to complete a new Form W-4 at any time, such as the result of a change of financial or personal circumstances.

Completion of Form W-4

Form W-4 is not the most complex IRS tax form, as it only includes 10 sections, but employees often need time to think about what’s best for them.

The 10 sections include:

  • First name, middle initial, and last name
  • Social Security number
  • Marital status
  • If your name differs from what is shown on your Social Security card
  • Total number of allowances
  • Additional amount, if any, to withhold from each paycheck
  • Claim exemption from withholding for the current tax year
  • Employer’s name and address
  • First date of employment
  • Employer identification number

Most of these sections are self-explanatory and don’t require any thought, but there are two that many employees struggle with:

  • Total number of allowances
  • Additional amount, if any, to withhold from each paycheck

Each allowance you claim reduces the amount withheld from your paychecks. Here’s a brief breakdown of what to consider when making this decision:

  • Too many allowances: you’re more likely to owe taxes at the time of filing your final return, which can lead to a situation in which you owe the IRS penalties
  • Too few allowances: you’re more likely to receive a tax refund, but you don’t have access to as much money during the year.

Note: if you make a mistake with the number of allowances you claim, adjust the number for the next tax year to avoid a similar situation.

Although employees complete Form W-4, employers must keep it on file and also make sure to withhold the correct federal income tax.

If you have any concerns about managing Form W-4 for your employees, contact us or consult with your tax professional.