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The W-4 form is a tax preparation document that helps employees determine their personal tax withholding. You can download this form from the IRS website and do it yourself, or you can have your employer complete it for you. This means there’s no need to prepare your own taxes each year if you are paid through payroll deductions
A W-4 form is a document that helps your employees complete the appropriate tax forms. It’s important to understand how it works and what you can do if your employee hasn’t completed it properly.
The “how to fill out a w4 for dummies” is a form that needs to be completed by employees. It helps the IRS calculate how much you owe in taxes.
A W-4 Form, also known as an Employee’s Withholding Certificate, provides you with the information you need to figure out how much money to withhold from your workers’ paychecks to pay their taxes each pay period. To prevent a large tax bill and penalties in April, employees must complete it correctly and send it to you before their first pay day. There are five sections to this puzzle, and it should only take a few minutes to finish.
What if I told you that
The IRS updated the W-4 Form in 2020 to make it easier to use and more accurate. The majority of workers now just need to complete Steps 1 and 5. However, we’ll go through the complete form so you can educate your staff on how to fill it out correctly.
Download the W-4 Form for 2022.
How Does the W-4 Form Work?
New recruits should complete and submit the W-4 form as soon as possible after starting work, since you’ll need time to process it before you can start conducting payroll. You’ll cross-reference the IRS withholding table with the information they provide (i.e., marital status, dependents, etc.) to determine how much money to deduct from their paychecks. On their year-end W-2 form, you’ll ultimately record the tax withholding.
The federal form is used in Colorado, New Mexico, North Dakota, and Utah. Other states have their own version of the federal form, which they may use instead of or in addition to the federal one. To find out which one you need, contact your state.
The new W-4 Form must be implemented before the start of the employee’s first formal payroll period, which must finish on or after the 30th day after you receive it. Consider the case of a bimonthly-paid employee (on the 15th and last day of the month). On November 12th, he submits his W-4. By December 15, you must set up his employment record and pay him using the new W-4 Form.
You cannot accept or fill out a W-4 Form for an employee by email. It must be signed in person. It is available in both print and electronic formats that meet with IRS standards.
Check out our post on payroll forms to discover more about the paperwork that employers are accountable for filling out or collecting.
Tips for Getting Your Employees to Fill Out the W-4 Form
It’s not only in your best advantage to have the W-4 Forms completed properly and on time, but it’s also in the best interest of your employee. Here are some pointers on how to complete the forms correctly.
- Decide on a deadline: If a new employee fails to furnish a Form W-4, you must consider them as a single filer with no adjustments, which means you must withhold the maximum amount permitted. They must, however, submit the paperwork at some point. Set a deadline for them, ideally before they get their first salary.
- Make filing it a part of orientation: Including the W-4 Form with the orientation papers you hand out to new employees assures that it is completed on time.
- Remind new employees to use the following name on all legal documents: Remind your staff to use their legal names—those on their Social Security cards—rather than nicknames or pen names, to minimize problems with identification.
- Maintain a straightforward approach: Because the new form is intended to be easy, if you know the employee does not have any of the deductions listed on it, urge them to complete Parts 1 and 5 and return it.
- Walk your staff through the steps of filling out a W-4 Form: Even the most basic form might be perplexing to a novice. Explain how to fill it out, and if necessary, take them through the computations. Demonstrate how to do dependent calculations and when to make further modifications or deductions.
- Provide video support: For orientation, make a how-to video or locate one on YouTube. (There’s a pretty extensive video on Money and Life TV with marks for certain areas and a spreadsheet with examples.)
Employees may be penalized if they underpay taxes, which may impact morale or necessitate the use of a pay advance. It’s critical that they complete out their W-4 accurately to decrease the number of troubles you’ll experience as a consequence of this.
To learn more about each part of the 2022 Form W-4, expand the headings below:
Parts 1 & 5
The only sections that an employee must complete are 1 and 5. Part 1 contains contact information and the status of the file, whereas Part 5 is the signature block. Make certain that the employee signs the paperwork using their full legal name. If workers just fill out these two parts, the IRS will tell you to withhold money based on their standard deduction on their tax return, with no extra modifications.
You must complete the Employers Only component of Part 5 as an employer.
Several Positions
Part 2 is for employees with Several Positions or those with a spouse who also works and will be filing taxes jointly with them. Some employees may not want to fill this out; it is not mandatory. If they choose to fill this out, they have three options for estimating withholdings.
- IRS Tax Withholding Calculator: Because the IRS claims that this is the most accurate, you may want to suggest that they utilize this online tax withholding estimator.
- Several Positions Worksheet: The worksheet provided on page 3 of the full Form W-4 is simple to follow. Advise employees not to use this unless your company is their highest-paying employer. If your company isn’t their highest-paying employer, recommend they redo the W-4 for the employer that pays them the most. If they are married filing jointly, this means the highest-paying employer between them and their spouse.
- Check the box in Option C: Tell workers to do this if they only have two jobs that pay about the same.
Dependents who meet the criteria
Part 3 is for workers with children or a qualified relative living with them who may be eligible for tax credits based on their income. Tell your employee that to qualify for dependent-related credits, they must have a total income of less than $200,000 (from all sources) if single, or less than $400,000 if married filing jointly.
It’s simple to ensure that more money is withheld upfront by not reporting dependents. As a result, many individuals will choose not to declare dependents in order to have more money withheld now and obtain a return later. It may also be beneficial if your employee has had difficulty paying a tax payment and must refund the IRS for a previous obligation.
Other Adjustments & Deductions
Requesting that you withhold an extra amount in Part 4 is another approach for your employee to avoid a large tax payment. Encourage them to explore this choice if they meet the following criteria:
- They have previously received tax bills.
- They want their money back.
- For self-employment, contract labor, interest, or dividends, they submit 1099s.
- Pensions or Social Security retirement payments are paid to them.
Changes to Employee Form W-4s are being processed.
Employees who previously completed Form W-4 do not need to complete a new form. If they make a lifestyle change that impacts their taxes, they may need to fill out a new form. If you know they’ve been through any of the following, you should advise they fill out a fresh form:
- Marriage
- Divorce
- Dependent or new infant
- Working two or more jobs
- Obtain a new source of income, such as a pension.
- A bonus or a high commission are examples of significant compensation adjustments.
- Last year, he complained about a high tax bill.
- For whatever reason, they want to adjust their withholdings
It’s just as simple to switch to the new form as it is to submit it for the first time. If an employee refuses to switch to the new form, you will continue withholding based on the old form’s information.
Conclusion
Your sole obligations as an employer are to ensure that an employee completes a Form W-4 accurately and withholds taxes based on the information they provide. Although you will not be fined, if workers fail to correctly complete the form, they may face a large tax bill in April as well as fines. Taking the effort to teach employees how to correctly fill out a W-4 Form may save them money and boost employee morale.
The “w4 vs w2” is a form that an employer needs to fill out for each employee. It includes information about how much the employee will pay in taxes, as well as what deductions they are eligible for.
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