What Form Does an Employee Fill Out for Taxes?

Filing taxes as an employee begins with completing the correct forms to ensure the right amount is withheld from each paycheck. The form you submit determines how much federal and, in some cases, state tax is deducted before you receive your earnings. Filling it out incorrectly could lead to owing money at tax time or receiving a smaller refund than expected.

The Federal W-4

The W-4 form, officially titled the Employee’s Withholding Certificate, tells employers how much federal income tax to deduct from each paycheck. The IRS redesigned it in 2020 to eliminate allowances, replacing them with income adjustments, dependents, and other tax credits to determine the correct amount.

Employees must complete a W-4 when starting a new job but can update it anytime. Changes in income, marital status, or tax credits affect withholding, making periodic reviews important. For example, getting married and filing jointly may reduce withholding, while claiming the Child Tax Credit can increase take-home pay.

The form includes sections for additional income, deductions, and extra withholding. Employees with significant non-wage income, such as dividends or rental earnings, can request extra withholding to avoid a large tax bill. Those who itemize deductions instead of taking the standard deduction can also adjust withholding accordingly.

Steps to Complete the W-4

Completing a W-4 starts with providing personal details, including name, Social Security number, and filing status. Filing status—such as single, married filing jointly, or head of household—determines the baseline tax withholding rate. Selecting the wrong status can result in too much or too little being withheld, affecting paycheck amounts and potential tax bills.

Employees can account for dependents, which directly affects withholding. For example, a taxpayer with two qualifying children under 17 may be eligible for the Child Tax Credit, reducing tax owed. The W-4 includes a section where employees enter the number of dependents and calculate the total credit they expect to receive.

Employees who expect to claim deductions beyond the standard deduction can estimate total itemized deductions on the form. If deductible expenses—such as mortgage interest, charitable contributions, or medical costs—exceed the standard deduction ($14,600 for single filers and $29,200 for married couples filing jointly in 2024), withholding can be adjusted to prevent excessive tax payments.

Multiple Job Considerations

Balancing tax withholding across multiple jobs can be challenging, especially when combined earnings push an employee into a higher tax bracket. The IRS uses a progressive tax system, meaning higher income is taxed at increasing rates. If each employer withholds taxes as if their paycheck is the only source of income, total withholding may be too low, leading to a balance due at tax time.

The W-4 includes a section for employees with multiple jobs. The IRS provides a “Multiple Jobs Worksheet” to help estimate the correct withholding amount. Employees can also use the IRS Tax Withholding Estimator, an online tool that factors in wages from all sources, deductions, and credits to recommend adjustments.

If one job pays significantly more than another, withholding at a standard rate may not be enough to cover total tax liability. Employees can request additional withholding on the W-4 for the higher-paying job to ensure enough tax is withheld throughout the year. This helps avoid underpayment penalties, which the IRS may assess if total withholding falls short of tax owed by more than $1,000.

Updating Withholding for Major Changes

Life events such as a promotion, bonus, or stock-based compensation can increase income and push an employee into a higher tax bracket. Without adjusting withholding, additional income may not have enough tax withheld, leading to an underpayment. The IRS imposes penalties if total tax paid during the year, including withholding and estimated payments, falls short of 90% of the current year’s liability or 100% of the prior year’s tax (110% for those earning over $150,000).

Major deductions or credits introduced mid-year can also impact withholding. Purchasing a home and claiming mortgage interest deductions can reduce taxable income, while education credits like the American Opportunity Tax Credit (AOTC) or Lifetime Learning Credit (LLC) may lower tax liability. Employees contributing pre-tax amounts to retirement plans, such as a 401(k) or traditional IRA, may also see a shift in their tax burden. For example, maxing out a 401(k) in 2024 ($23,000 limit, with an additional $7,500 catch-up for those 50 and older) lowers taxable income, potentially reducing required withholding.

State Forms

While the W-4 determines federal tax withholding, many states require a separate form for state income tax deductions. Some states, such as California and New York, have their own withholding certificates (DE-4 and IT-2104, respectively), which account for state-specific tax brackets, credits, and deductions. These forms often mirror the federal W-4 but may include additional fields for state tax allowances or exemptions.

Not all states impose an income tax, so employees in Texas, Florida, and Washington do not need to complete a state withholding form. In states with flat income tax rates, such as Pennsylvania (3.07%) and Illinois (4.95%), withholding is typically a fixed percentage of earnings. Employees working remotely across state lines may be subject to reciprocal tax agreements, allowing them to pay taxes in their state of residence rather than where their employer is located. Submitting the appropriate exemption form ensures taxes are withheld correctly and prevents double taxation.

Submitting Final Paperwork

Once the W-4 and any applicable state forms are completed, employees must submit them to their employer’s payroll department. Employers use this information to calculate withholding amounts, which are then reported to the IRS and state tax agencies. If an employee does not submit a W-4, the IRS requires employers to withhold taxes as if the employee is single with no adjustments, often resulting in higher deductions.

Employers are not responsible for verifying the accuracy of an employee’s withholding choices but must process changes promptly. The IRS may review withholding amounts if an employee consistently underpays taxes, potentially requiring adjustments. Employees should retain a copy of their completed W-4 for reference, especially if they need to update it later. Payroll systems typically allow for electronic submission, ensuring changes take effect in the next pay cycle.