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If your employees need help understanding W-4s for their income taxes, you can assist them without intruding too far.
When your employees have questions, you can give them some direction without advising them. This will save you and your employees a migraine in terms of money and time.
But don’t overstep your boundary as an employer. Encourage them to do their own footwork with the Internal Revenue Service. The site provides W-4 information.
How you can assist your workers:
1. Provide an explanation of the W-4.
This is important to do when you onboard employees. Don’t be surprise when their eyes glaze over. Remind them of the importance of the form.
It’s important they understand. As you know, if they don’t have enough withholding, they’ll be shocked when they file their income taxes.
If they request too much money be withheld, they’ll unnecessarily be getting smaller paychecks on which to live.
2. Give employees adequate time to decide how much to withhold.
Of course, they have to make a decision on their filing status and the proper amount to have withheld.
It’s a relatively simple process for a single person who doesn’t have children. But it’s more complex for other employees.
Those employees who have a second job or a side hustle have additional matters to consider as do married employees with a spouse who also has a career.
Other decisions include, for example, the Child Tax Credit or the credit for other dependents. Plus, there are additional tax benefits they might want to consider.
Try to allow the employees take a day or two – whether at work or at home – to decide what to do. They might need to talk with their spouses, review the numbers and check with the IRS.
But remind them to complete and return the form soon.
3. Inform employees about the IRS tax withholding estimator.
For most workers, IRS tax estimator provides adequate information. It includes instructions and worksheets, and space to configure dividends, their anticipated deduction claims, their retirement income and even voluntary extra withholding if they desire.
By using the form, it’s possible to get recommendations.
Caution your employees the form isn’t part of their income tax return. The form doesn’t require personal information such as a social security number or name, nor does it save the information.
4. Advise your employees to regularly review their W-4s.
Because employees aren’t required to complete a W-4 each year, they’ve likely forgot all about it.
But a lot of people have changing circumstances that affect their taxes such as child births, adoptions, death of a spouse or divorce.
It’s a good idea for them to consult the tax withholding estimator periodically anyway in case they might want to change their minds about how much to withhold.
From the Coach’s Corner, editor’s picks for employers:
Tips to Guarantee You’re Complying with IRS on W-4s – When it comes to withholding, are you in compliance with the Internal Revenue Service? With the changes brought by the Tax Cuts and Jobs Act, it’s important to review your payroll approach.
Tips on Understanding the Mindset of IRS Auditors – An IRS audit is enough to make you tense with cold sweat in the palms of your hands. More businesspeople have complained to me about the mean-spirited treatment at the hands of IRS agents than any other federal agency.
Management Responsibilities if Employee is FMLA Eligible – There are guidelines required of your business if your employees think they’re eligible for FMLA. See these business tips.
Precautions for HR Documents to Avoid Losing a Legal Case – Managers using best practices in compliance, who are aware of the latest trends and avoid common errors, fare the best against civil litigation, criminal allegations and other legal issues. Here’s how they do it.
Your Expense and Tax Obligations with Remote Workers – While there are advantages for employers with a remote staff, there are numerous financial issues to consider when you employ telecommuting employees. You need a written agreement. Here’s an overview.
“We’ll try to cooperate fully with the IRS, because, as citizens, we feel a strong patriotic duty not to go to jail.”
-Dave Barry
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