If you have employees, they must file the W-4 form (employee’s withholding certificate) for taxes. Even if you're familiar with this form, it's important to know that it's been updated. The new W-4 now has only five sections instead of seven.
The current W-4 has undergone some changes that employees may only be aware of if they frequently or recently switched jobs. These changes have to do with exemptions. To illustrate, the new W-4 form no longer requires employees to indicate dependency or personal W-4 exemptions. Instead, they will state how many dependents they can claim.
Taxes can be complicated. You need good professional help and information to properly tax your team — including those that work in-office and digital nomads. Partnering with an employer of record like Skuad can help you quickly scale through this process.
Even with professional assistance, it helps to learn what the federal W-4 form entails. This guide will provide vital information to fill out this form and estimate income taxes.
How to fill out a W-4 Form in 2023
Employees typically fill out this form themselves. Here is how to fill out a W-4 form accurately:
Fill out personal information
The first section pertains to your data. Fill out your basic information, including full name, filing status, address, and Social Security number.
Input job(s) information
The following section is the Multiple Jobs Worksheet. If you have one job and your spouse has one job, fill out line 1 and skip line 2.
If you and your spouse have at least three combined jobs, fill out line 3. Using this W-4 worksheet, you can calculate how much more should be withheld if you have multiple jobs.
Dependents, including children, claim
Step 3 is the section for adding information on your dependent(s). A dependent could be a child or relative you support. You may ignore this section if you have none.
Having dependents makes you eligible for the Child Tax Credit. Fill out the section if you have dependents and do not earn more than $200,000 annually. Likewise, fill out this part if you file jointly with your spouse and earn no more than $400,000.
Determining your dependent claim is simple. Multiply $2,000 by the number of dependents you have under the age of 17. For other dependents, multiply their number by $500. Add both figures.
This section is where you add your additional withholding information. Enter the amount you expect to earn outside your primary salary, like interest or dividends.
Under the deduction worksheet, calculate and document your total adjustments. Figuring out your adjustments correctly can enable you to determine the tax deductions you are eligible for. Knowing how much you claimed in deductions is useful. You must fill out the deduction worksheet if you claimed over the standard deduction amount.
After completing the worksheet, you can add other taxes you want to be withheld during each pay period.
Signature and Date
The form becomes complete and valid when the employee adds their signature. This implies that the information in the form is accurate to their knowledge. Along with your signature, you must add the current date. This is crucial for auditing and compliance purposes.
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What does W-4 Form look like?
A W-4 form is similar to other IRS forms, with sections you must fill out according to your personal info. This is what an employee's withholding allowance certificate looks like:
Download W-4 Form
Although the W-4 form is available on various websites, visit the IRS website to download the official copy. Downloading from the official IRS website guarantees the accuracy and security of your information and ensures it's the most up-to-date version.
How to estimate income taxes
Knowing how much income tax to pay is crucial to avoid potential legal issues. It pertains to determining what employers should and should not deduct from an employee’s salary. You will need crucial information, like the Tax Identification Number and Social Security Number, for US citizens. Follow these steps:
- Choose your tax filing status: An individual can file taxes as “single” or “head of household” if unmarried. If married, individuals can file jointly with their spouses or separately. Tax filing statuses have different implications.
- Report all your income: You can only know your income tax when you know how much you earn overall. Although you may not be taxed on some, you must report all earnings, including your side hustle.
- Determine income taxes. After reporting all your income, separate your taxable income from your adjustments. These adjustments include your mandatory contributions, expenses, or payments, such as Social Security and Medicare. Deduct them from the remaining balance for your net salary. You can use the W-4 calculator on the IRS’s website to calculate the amount you want the employer to withhold.
How Skuad can help you with W-4 Form
The W-4 helps employers know how much to withhold from an employee’s salary. You can hire employees and do taxes for your remote international team with adequate information. However, it can be tricky, and you risk compliance issues without the help of experts like Skuad.
At Skuad, we help our clients in over 160 countries easily navigate their employee tax commitments. Our experts will also help you identify and avoid loopholes that may result in legal troubles. Contact Skuad experts today to make managing your team's taxes a breeze.
Frequently Asked Questions about W-4 Form
What is a W-4 tax form for?
A W-4 tax form helps employers determine how much they can withhold from an employee’s salary. The employer issues this form to an employee, usually at the start of employment. In return, the employee completes the form, indicating their dependents and other income sources.
Who needs to file a W-4?
Every employee must file a W-4 at the start of a new job. This implies that employees must file a new W-4 form each time they change jobs. After filing the form, they must hand it to their new employer.
What is the difference between W-2 and W-4?
The employer fills out the W-2 while the employee fills out the W-4 form. The employee uses the W-4 to indicate how much can be withheld from their salary. Meanwhile, the employer fills out the W-2 to indicate how much they paid the worker and how much they withheld.