Form W-4

What Is Form W-4?

Form W-4, officially titled the Employee’s Withholding Certificate, is a U.S. IRS document used by employees to inform their employer of how much federal income tax to withhold from their wages. It’s typically submitted during onboarding or after major life changes (like marriage, divorce, or having children). The employer then uses this data to calculate payroll tax deductions accurately. For employers operating in the U.S., collecting and applying W-4 data is not optional—failure to do so can result in incorrect withholdings, tax penalties, and audit exposure. 

Why Is Form W-4 Important for Employers? 

Accurate Form W-4 processing is essential for: 

• Ensuring IRS compliance in all tax calculations 

• Avoiding over- or under-withholding that can cause employee dissatisfaction 

• Managing multi-state tax exposure for remote or mobile employees 

• Supporting cross-border payroll compliance for global businesses with U.S.-based talent 

With the IRS requiring accurate, real-time tax withholding data, the W-4 becomes a critical touchpoint for employers’ payroll teams. 

How the 2020 Redesign Changed W-4 Compliance 

In 2020, the IRS overhauled the W-4, removing withholding “allowances” and shifting to a multi-step format based on income, dependents, and adjustments. The new format improves precision but requires employees to engage more actively with the form. 

Employers must ensure all new hires use the updated form and that internal payroll systems accommodate these new steps. 

Who Needs to Complete Form W-4 and When? 

Form W-4 must be completed by any U.S.-based employee receiving wages. It's particularly important when: 

• A new hire joins the company 

• An employee’s tax status changes (e.g., marriage or dependents) 

• The employee has multiple jobs or a working spouse 

• There is additional income not subject to withholding (e.g., investments) 

If an employee doesn’t submit a W-4, employers are legally required to default to single filing with no adjustments—typically resulting in higher tax withholding. 

How Employers Should Process Form W-4 

After receiving a W-4: 

• Verify that all steps have been completed, signed, and dated 

• Input data into payroll software or HRIS systems 

• Retain the W-4 in your records (it’s not filed with the IRS) 

• Apply changes in the next payroll run 

Employers must maintain up-to-date records and adjust withholdings promptly upon any resubmission. 

How TopSource Worldwide Simplifies W-4 Compliance 

Global companies hiring U.S. employees often face complex tax scenarios. TopSource Worldwide ensures: 

• W-4 collection and validation during onboarding 

• Secure storage of all tax documentation 

• Seamless integration with local and multi-state payroll systems 

• Guidance for employees completing W-4s in diverse employment scenarios 

Our compliant-first approach removes guesswork, reduces audit risks, and ensures that your U.S. payroll runs cleanly and in line with evolving IRS regulations.