3 Things Employers Should Know About Form W-4

3 Things Employers Should Know About Form W-4 

Tax season is lingering ahead. Unless you have been reading up regularly, you probably have a few questions about the latest federal tax legislation and what it means for you personally as well as your business and employees, including questions about Form W-4, Employee’s Withholding Allowance Certificate. Below are a few questions our readers have asked that we would like to address to make your 2018 tax season a little more seamless. 

Form W-4 in a Nutshell 

Form W-4 is used to record the correct withholding allowances for an individual employee, to be filed with their federal income taxes each year. This form is to be completed by the employee and is the basis for the taxes withheld by an employer from the employee’s federal income taxes. This form should be reviewed annually and any changes should be updated. If a personal or financial situation changes during the year, it can also be updated then. 

When do employees need to submit Form W-4? 

Each employee should complete a Form W-4 when they are hired. Additionally, the form should be reviewed and re-submitted every December because withholding allowances are capable of seeing annual shifts. It is also important that employees claiming exemptions from withholding file new form W-4s by February 15th of the year they are claiming exemptions for. 

What if an employee does not update or complete Form W-4? 

There are occasional cases where employers do not have completed W-4 forms on file for certain employees, whether it is because they never received a completed one from them or a new one was never submitted despite a change in status. In these cases, the employer is cleared of responsibility in the eyes of the IRS.