W-4 Form: What It Is and How to Fill It Out?

Undoubtedly, there is vital information that your recruiter needs to know before onboarding. So that the gap between the candidate and the company is narrowed down as much as possible. All this information is collected for the best interest of the candidate and the company and is shared only with authorised bodies in an emergency or unavoidable government circumstances.

Often candidates wonder why they have been asked to fill such a lot of forms, and some of them seem irrelevant to them, but in the actual scenario, these forms are crucial for the candidate themselves. Form W-4 is one of the mandatory forms to be submitted during recruitment.

Table of contents

What is W-4 Form?

The W-4 form, also known as the “Employee’s Withholding Certificate”, is among the multiple forms that your recruiter will ask you to submit while onboarding you. This form determines the amount of tax your employer is going to withhold from your future paychecks. The money that is going to be deducted from your paycheck as tax is sent to the Internal Revenue Service (IRS)  against your registered full name and issued Social Security Number for documentation. The total amount withheld is used to calculate the total annual income tax when you file your income tax return in the month of April.

How to fill out the W-4 form?

Form W-4 can be easily downloaded from the IRS website. Here’s a complete guide on how to fill out the W-4 form accurately.

1. Enter your personal information

Enter the basic details such as the full name, address, Social Security number, tax-filing status and so on.

2. Account for multiple jobs or joint filing

In case, you are working for more than one company or file your taxes jointly or your spouse is also working, you need to go through the below-mentioned instructions to get a better withholding.

  • In the case of the highest paying jobs, it is mandatory to fill out steps 2 to 4(b) of the W-4 form. Others can leave these spaces blank, as it is irrelevant to them.
  • In case you are married and filing along with your spouse (jointly) and both of you happen to earn the approximately same amount, you need to check a box indicating this. The hack is that both of the spouses have to mark this on their individual W-4s.
  • In case you are uncomfortable revealing about your second job or additional income from any non-job sources, there are a few alternatives.You can direct your employer to withhold an extra amount of tax from your paycheck in line 4(c). Else you can exclude the additional income from your W-4 form. Instead of having the tax come directly out of your paycheck, you can make the payments on a quarterly basis to the IRS by yourself.

3. Add dependants (including children)

In case your summed income comes below $200,000 (or below $400,000 if filing along with your spouse), you can enter the total number of kids and dependents you have and multiply the number with the credit value. (Go through the rules regarding the child tax credit rules and when you can claim a tax dependent.)

4. Note additional witholdings and deductions

If you wish to withhold excess tax or wish to claim deductions on top of the standard deductions, you may note these, while filing for your taxes.

5. Add the signature and date to the W-4 Form

Once the entire form is completed and reviewed, submit the signed and dated form to the human resources, payroll or recruitment team of your organisation.

Summing Up

Even if you are unaware of the utility of a form, you must still fill it out with utmost care as your employer won’t ask you for any irrelevant information. Once you get a form you can quickly run a Google search to learn about the basics of the form,  guidelines for filling it and the precautions you need to take while filling it.

The Form W-4 has to be filled up correctly because the IRS  needs that people gradually pay taxes throughout the year on the other income. If you have a small amount of tax withheld, you would be liable to pay a shockingly large amount to the IRS because of the interest rate and penalty levied for underpaying the taxes throughout the year.

On the other hand,  if you have excess tax withheld, you will be indirectly lending out money to the government without any interest,  where you could have saved or invested the amount. You will have to wait for the next year to file the return and claim the excess paid taxes. Therefore,  one must consult with the accounting team before making any transactions and know about any due transactions.