Definition
An IRS form that employees complete to indicate their federal income tax withholding preferences to their employer, determining how much federal tax is deducted from each paycheck.
UK Context
Best Practices
- Collect a completed W-4 from every new hire before processing their first payroll
- Never advise employees on how to fill out the W-4 — direct them to the IRS Tax Withholding Estimator instead
- Process W-4 changes promptly, no later than the start of the first payroll period ending 30+ days after receipt
- Retain W-4 forms for at least four years and store them securely as they contain sensitive personal information
Frequently Asked Questions
Can an employee claim exempt status on the W-4?
Yes, if the employee had no federal income tax liability in the prior year and expects none in the current year. Exempt status must be renewed annually — it expires on February 15 of the following year. Employers should track expiring exempt W-4s.
What if an employee does not submit a W-4?
The employer must withhold federal income tax as if the employee is single with no other adjustments, which is the highest default withholding rate. The employer should continue efforts to collect the form.
How often can an employee change their W-4?
Employees can submit a new W-4 at any time. Common reasons include marriage, divorce, the birth of a child, or a change in income. There is no limit on how many times an employee can update their W-4 during the year.