What Tax Form Is Received When You Start a Job?
Learn about the crucial documents and processes for financial and legal setup when you start a new employment or work arrangement.
When starting a new job in the United States, new hires complete various forms for payroll and compliance. Employers require specific information to ensure proper wage payments and adherence to federal and state regulations. These forms are a standard and mandatory part of the onboarding process, establishing an employee’s identity, work eligibility, and how their income will be taxed.
Key Forms for Employees
New employees complete two primary forms upon hire: the Form W-4 and the Form I-9. The Form W-4, or Employee’s Withholding Certificate, informs your employer of the correct amount of federal income tax to withhold from your paychecks. Completing this form involves providing personal details and making elections that influence your tax withholding, such as your filing status, any dependents claimed, and whether you have other income sources or wish for additional tax to be withheld.
Completing Form W-4 requires careful attention across its five steps to ensure accurate withholding. Step 1 involves entering your personal information, including your name, address, and filing status. Step 2 is relevant if you hold multiple jobs or are married filing jointly and your spouse also works, requiring adjustments to prevent under-withholding. In Step 3, you claim tax credits for dependents, such as the Child Tax Credit or Credit for Other Dependents, which reduces your total withholding. Step 4 allows for other adjustments, including additional income not subject to withholding, itemized deductions beyond the standard deduction, or any extra amount you wish to have withheld each pay period.
The other mandatory document is Form I-9, Employment Eligibility Verification, which verifies an employee’s identity and legal eligibility to work in the United States. This is a statutory requirement for all employers to complete for every new hire. Employees must present specific unexpired documents from the Lists of Acceptable Documents found on the form. These include documents establishing both identity and employment authorization (List A, such as a U.S. passport or permanent resident card), or a combination of documents establishing identity (List B, like a driver’s license) and employment authorization (List C, such as a Social Security card or birth certificate).
Understanding Withholding and Year-End Reporting
The information on your Form W-4 directly influences how your employer calculates and remits federal income tax withholding from each paycheck. Employers use this data, combined with IRS tax tables, to determine the appropriate amount of federal income tax to forward to the U.S. Treasury. This process ensures that your tax liability is gradually paid throughout the year, rather than as a single lump sum when you file your annual tax return. The specific amount withheld can vary based on your pay frequency, such as weekly, bi-weekly, or monthly.
Beyond federal income tax, many jurisdictions require employees to complete state-specific withholding forms, similar to the federal Form W-4. These forms gather necessary information to determine the correct amount of state income tax to deduct from your wages. Employers then remit these state-specific withheld funds to the respective state tax authority, ensuring compliance with state tax obligations.
By January 31, your employer will provide you with a Form W-2, Wage and Tax Statement. This document provides a comprehensive summary of your annual earnings and all taxes withheld from your pay. Key boxes on the W-2 include Box 1 for your total taxable wages, tips, and other compensation, and Box 2 for the total federal income tax withheld. It also reports Box 3 for Social Security wages, Box 4 for Social Security tax withheld, Box 5 for Medicare wages and tips, and Box 6 for Medicare tax withheld. The Form W-2 is used for preparing and filing your federal, state, and local income tax returns.
Forms for Independent Contractors
Individuals working as independent contractors, rather than traditional employees, follow a different process for tax reporting. These contractors are self-employed, meaning the company paying them does not withhold income taxes from their payments. Contractors are responsible for managing their own tax obligations, including estimated tax payments throughout the year.
When you begin working as an independent contractor, the payer will request a Form W-9, Request for Taxpayer Identification Number and Certification. The purpose of this form is for you to provide your Taxpayer Identification Number (TIN), such as your Social Security Number (SSN) or Employer Identification Number (EIN), to the payer. This TIN is necessary for the payer to report the income they pay you to the IRS. You also certify that the TIN is correct and that you are not subject to backup withholding.
If payments from a single payer total $600 or more, that payer is required to issue you a Form 1099-NEC, Nonemployee Compensation, by January 31 of the following year. This form reports the total amount of nonemployee compensation paid to you. Contractors then use the information from Form 1099-NEC to report their self-employment income on Schedule C (Profit or Loss from Business) of their federal income tax return, Form 1040.