New employees must complete Form W-4 before they start working at your business. With Form W-4, employees can claim withholding allowances for federal income tax withholding, which allows you to run payroll. To adjust their allowances, employees must change W-4 forms.
As an employer, you might be wondering about the rules for updating Form W-4. Read on to learn when and how employees can change their forms, as well as your employer responsibilities when they do.
About Form W-4
Form W-4, Employee’s Withholding Allowance Certificate, is an IRS form that lets new employees claim withholding allowances from federal income taxes. The more allowances the employee claims, the less you withhold from their gross wages for federal income taxes.
The certificate also prompts employees to record their family status, which is additional information you need to run payroll.
Use the withholding allowances and family status on Form W-4, pay frequency, and pay rate, along with the income tax withholding tables in IRS Publication 15, to determine how much to withhold for federal income taxes.
Form W-4 is also the form to change withholding allowances. When an employee wants to change how much you withhold for federal income taxes, they must fill out a new W-4 form.
Why would employees want to change W-4 forms?
There are a number of reasons an employee might want to change their withholding allowances.
An employee might want to decrease their withholding allowances to make sure they have enough withheld for the year. Or, an employee may wish to increase their withholding allowances to prevent too much from being withheld.
Another reason an employee might want to make changes to their Form W-4 is if they have a family status change, like getting married or having a baby.
When can employees update W-4 forms?
Has an employee ever asked, “Can I change my W-4 today?” If so, you need to know the answer.
Generally, employees can change W-4 forms when they want to. However, there are some special regulations the IRS sets.
If an employee undergoes a divorce or any other event that decreases how many allowances they can claim, they must file a new Form W-4 within 10 days.
If you receive a lock-in letter from the IRS, employees cannot change Forms W-4. The IRS sends lock-in letters when employees have not had enough money withheld from their wages. The lock-in letter sets a maximum number of withholding allowances the employee can claim. The IRS will send a lock-in letter to you and also a copy to give to the employee.
How to change W-4 forms
Employees can change Forms W-4 by filling out a new form. After they change their withholding allowances or filing status on the form, they must give it to you. You will then alter payroll for the employee, based on the new information.
If you use employee self service, employees can change their Forms W-4 documents by logging into their portals. That way, they can submit changes through the system. Or, employees can print a new form and give it to you.
When you receive an updated Form W-4 from an employee, you can make changes for the next payroll period. If you decide to wait, you have a time limit. According to the IRS, you have until the first payroll period ending on or after 30 days of receiving the form to make changes.
Be sure to store the updated copy of Form W-4 in your records.
When employees add or remove withholding allowances, you need to change payroll. With Patriot’s online payroll software, you don’t need to calculate their new federal income tax deduction. Simply enter the updated allowances, and let our software do the rest. Get your free trial now!
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