What Is Form W-4? A Primer for Employers

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

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 withholding information each employee indicates on their Form W-4. The IRS also takes into account whether employees are filing jointly or on their own, among other factors.

What 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.

How do you fill out the employer section of a W-4 Form?

As an employer, your focus should be on the employer section, which is often labeled as "Employer Only" or similar. Here, you'll need to provide your Employer Identification Number (EIN), which is a unique nine-digit number assigned to your business by the IRS. If you do not have an EIN, you'll need to apply for one through the IRS website or by filing Form SS-4. Other details you’ll need to provide are: 

• The employee’s first date of employment

• Your company’s legal name and address

Based on the information your employee has provided on their Form W-4, use the IRS Tax Withholding Estimator or the tax tables in IRS Publication 15-T to determine the correct amount of federal income tax to withhold from their wages.

Should employees update W-4 forms every 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.

What happens if too much tax is withheld?

If your employee didn’t claim all the allowances they were entitled to, their employer cannot repay the tax previously withheld — but the employer should ensure that the employee fills out a revised W-4 to correct the amount moving forward. If, however, the employer mistakenly withheld 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.

How Justworks Can Help

HR compliance can be tricky, but we have good news! If you become a Justworks PEO or Justworks Payroll customer, we actually take care of all your payroll tax filing on your behalf. Seriously. We know this is stressful stuff and it’s a lot to keep track of for all of your employees. Let us worry about it for you. 

We’ll handle all of your company's quarterly payroll tax returns on your behalf. Costs are already included in your monthly Justworks fee.

Ready to learn more about how Justworks can help you free up time to spend on supporting your people and growing your business? Contact us today to get started.