Form W-4, the Employee's Withholding Certificate, is the IRS form a new employee completes so the employer knows how much federal income tax to withhold from each paycheck. Since 2020 it no longer uses allowances; employees report filing status, multiple jobs, dependents, and other adjustments instead.
Key takeaways
- Every new employee should complete a W-4 before their first payroll.
- If an employee doesn't return one, withhold as if they are single with no adjustments.
- Employees claiming exempt must file a new W-4 by February 15 each year.
- Employers keep W-4s on file and send them to the IRS only when asked.
How Form W-4 works
The current W-4 has five steps. Step 1 is personal information and filing status. Step 2 accounts for a second job or a working spouse, either through the IRS estimator, a worksheet, or a simple checkbox. Step 3 claims credits for dependents. Step 4 allows other income, extra deductions, and any extra withholding per paycheck. Step 5 is the signature. Only Steps 1 and 5 are required (IRS, About Form W-4).
Payroll takes those entries and applies the percentage method or wage bracket tables in IRS Publication 15-T to calculate withholding each period. Employees who filled out a W-4 before 2020 don't have to submit a new one; payroll systems use special computational rules for the older forms.
Many states have their own withholding certificate, and some accept the federal W-4. Remote employees in a new state usually need that state's form at hire.
Form W-4 example
A new marketing manager, married with two children under 17, completes the W-4. She checks married filing jointly, checks the Step 2 box because her spouse also works, enters $4,400 in Step 3 for two qualifying children, and leaves Step 4 blank. Payroll enters these values, and the system calculates her federal withholding each pay period from the Publication 15-T tables.
If she later finds she owes at tax time, she can submit a new W-4 adding an extra flat amount in Step 4(c). You must put a new W-4 into effect no later than the start of the first payroll period ending on or after the 30th day after you receive it.
Why Form W-4 matters for employers
The W-4 is the employee's decision, not yours, and that boundary matters. HR and payroll staff can explain the form, but they shouldn't tell employees what to enter. Doing so risks giving tax advice and creates liability if the result is wrong.
The employer's job is accurate processing and recordkeeping. Keep W-4s for at least four years, process changes on time, and follow any lock-in letter the IRS sends, which sets a maximum withholding status the employee can't lower without IRS approval (IRS Publication 15 (Circular E), Employer's Tax Guide). A digital onboarding flow that collects the federal W-4, any state form, and the I-9 in one session prevents the most common gap: a first paycheck run with no withholding certificate at all.
Common Form W-4 mistakes to avoid
Telling employees how to fill it out
Point them to the IRS Tax Withholding Estimator instead of giving advice.
Ignoring the February 15 exempt deadline
If an exempt employee doesn't refile, withhold as single with no adjustments from then on.
Accepting an incomplete form
A W-4 without a signature or with altered text is invalid. Treat it as never received.
Forgetting state withholding forms
Federal withholding alone leaves state tax wrong for employees in states with an income tax.
Form W-4: questions people also ask
What is a W-4 used for?
Do I still claim allowances on a W-4?
Can an employee change their W-4 anytime?
What happens if a new hire doesn't fill out a W-4?
What is the difference between a W-4 and a W-2?
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HRTally glossary entries are written by people who have run US payroll, benefits, and HR operations, then checked line by line against primary sources such as the IRS, Department of Labor, EEOC, and Bureau of Labor Statistics. Dollar limits and rates are for 2026 unless stated. We review every entry at least twice a year and whenever a rule changes. This page explains general rules and isn't legal or tax advice; state law can differ. Read our editorial standards.
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<blockquote>Form W-4, the Employee's Withholding Certificate, is the IRS form a new employee completes so the employer knows how much federal income tax to withhold from each paycheck. Since 2020 it no longer uses allowances; employees report filing status, multiple jobs, dependents, and other adjustments instead.</blockquote><p>Source: <a href="https://www.hrtally.com/hr-glossary/form-w-4/">HRTally HR Glossary, Form W-4</a></p>
Written by the HRTally Research Team
Our guides are written and reviewed by people with hands-on US HR, payroll, and HR technology experience. Legal and tax facts are checked against primary sources, such as the Department of Labor, IRS, EEOC, and USCIS, and linked at the end of each guide. Vendors never review or pay for our editorial content.