New employees must complete Form W-4 before they start working at your business. With Form W-4, employees input information that determines their federal income tax withholding, which allows you to run payroll. To adjust their withholding, 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 Certificate, is an IRS form that lets new employees determine withholding from federal income taxes. Employees can claim dependents or use the deductions worksheet to reduce income tax withholding.
The certificate also prompts employees to record their family status, which is additional information you need to run payroll.
Use the withholding and family status information on Form W-4, pay frequency, pay rate, and 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 amounts. Employees must fill out a new W-4 form when they want to change how much you withhold for federal income taxes.
Why would employees want to change W-4 forms?
There are a number of reasons an employee might want to change their withholding.
An employee might want to increase their withholding to make sure they have enough withheld for the year. Or, an employee may wish to decrease their withholding 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 an event that impacts their withholding, 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 determines an employee’s withholding arrangement. The IRS will send you a lock-in letter and a copy to give 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 information 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 change up their withholding, 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 information, and let our software do the rest. Get your free trial now!
This article has been updated from its original publication date of October 8, 2018.
This is not intended as legal advice; for more information, please click here.