Employers: Note key features of the W-4.
Oct. 13, 2026-
When it comes to withholding, are you in compliance with the Internal Revenue Service (IRS)? With the changes brought by the Tax Cuts and Jobs Act (TCJA), it’s important to review your payroll approach.
Whether you outsource your payroll or you’ve been on autopilot, you are always held responsible by the IRS.
You can download and print the official Form W-4 from the Internal Revenue Service web site. The current PDF file is found at IRS Form W-4 PDF.
If you use a payroll service provider, such as ADP, Paychex, SurePayroll or Gusto, they have digital W-4 onboarding packets.
Companies are allowed to set up their own electronic onboarding or HR system to collect Form W-4 data directly from employees, https://www.ecfr.gov/current/title-26/chapter-I/subchapter-C/part-31/subpart-E/section-31.3402(f)(5)-1.
Foe prior-year forms or supplemental guides, such as Publication 15, Employer’s Tax Guide are also available through the IRS Forms and Instructions Directory.
As you know with W-4s, your employee indicate their number of withholding allowances and then you calculate the amount of their income-tax withholding based on your pay period.
The federal personal exemption amount is $0 for the 2026 tax year after being permanently repealed. As a result, the IRS deleted the word, allowance, from both the title of the form and the option on the form for employees to complete.
Your workers who are in just basic situations such as being single with no dependents and no other deductions or income, only have to fill out steps No.1 and No. 5. (Note: You’ll need to make changes if you use an electronic W-4.)
Remember there are rules changes including the withholding of child support, employee taxes and retirement contributions.
Here are the five steps:
Step No. 1 – Personal information
Your employees must enter their names, addresses and their filing status. But the form deletes the option for heads of households.
Married couples can check the Step 1c option for indicating single or married filing separately (even if the couple is filing as joint filers).
Divorced couples must refile W-4s within 10 days (if the had claimed married status).
Step No. 2 – Multiple jobs or spouse is working
Optional whether for employees to complete, they can indicate they’re working up to two jobs (for their own job or the spouse’s job). Of course, this will increase their withholding by probably close to 50 percent.
Step No. 3 – Claim dependents
Optional for your workers to complete, they complete this step if they want to take advantage of child and dependent care and other credits. (It allows them to claim tax credits for qualifying children, $2,200 per child under 17 and $500 for other dependents.)
Naturally, this will result in a decrease in their pay-period withholding and for their tax liability.
Note: Because this is primarily for claiming dependent credits, your employees who want other tax credits should be careful to calculate the value of their desired credits.
Step No. 4 – Other adjustments
This is where your employees indicate their additional income, such as interest or dividends. Line 4a is capital gains and or other income. Line 4b is for other deductions they want to take.
This means the amount they indicate on 4a will increase their wages for withholding. Line 4b will decrease the wages withheld. If your employees want additional withholding, they’ll use line 4c.
If they want to claim an exemption from withholding, they need to write the word, exempt, beneath line 4c (if they had zero tax liability last year and expect zero this year).
Step No. 5 – Sign and date
Under the penalty of perjury, employees sign and date the form.
From the Coach’s Corner, here are relevant tips:
Checklist to Audit Payroll Processes to Avoid Costly Mistakes – Payroll mistakes can be costly, if your company fails to comply with changes in the tax code. To avoid issues with the Department of Labor or the Internal Revenue Service, it’s best to review your payroll processes.
11 Payroll and Tax Tips for Small Businesses – To stay competitive, it’s vital to be proactive on your taxes. Of course, you should be very familiar with your responsibilities – along with your financial advisor’s input and research with the Internal Revenue Service.
When Companies Must Pay Overtime for Commute, Travel – Figuring out how much money to pay your non-exempt employees and when to pay them for commute and travel time is a multifarious matter.
Without knowing it, it’s easy for you to become noncompliant with FLSA.
Are Profits Up? Manage and Maximize Your Excess Liquidity – Is your business in a growth cycle? Effectively handling your liquidity, or excess cash, is crucial for profitability if your company is building capital.
For Accuracy and Profits, 14 Small-Business Finance Tips – Being defensive is a key for you in small business finance – making sure your technology, bank accounts and bookkeeping are secure and in the best-possible shape.
“You know, in the beginning when your first payroll comes up and you have to borrow money to meet the payroll, you lose sleep the night before, and you say to yourself real fast, ‘Well, maybe I should keep working a couple more years. It’s sobering.”
-Bill Kurtis
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