For many employees, completing the Form W-4 can be a confusing and frustrating process. The instructions are lengthy (2017 Federal Tax Guide or Circular E is 69 pages long). As a result, many employees turn to their manager or supervisor for help in determining how to complete these forms.
Although we all want to help our employees, it is important to remember employers should always avoid giving employees specific tax filing advice and should never complete these forms for employees.
There are several different tips that employers can offer to employees to help in the correct tax filing decision without putting themselves at risk. Here are a few:
- Employees can change their filings at any time and as many times as they would like by completing and submitting new W4 forms. Don’t worry about getting it perfect the first time, you can always make adjustments.
- Don’t forget about the “additional amount” option on the W-4, which allows employees to fine-tune their withholding amount. This is an under-utilized option employees can consider.
- Employees may want to consult a certified tax professional. Such professionals will be able to give knowable filing advice that employers are not able to.
- Understand your pay cycle. Whether employees are paid weekly, biweekly, or semi-monthly this will affect their withholding calculation.
- Keep in mind any payroll deductions you have in place. Many benefit plans are deducted on a pre-tax basis and will lower an employee’s taxable wages. Employers can help determine what deductions are pre-tax and which are not.
In addition to these tips, the IRS has an online withholding calculator that is much easier to navigate and can be found at https://www.irs.gov/individuals/irs-withholding-calculator . Encouraging employees to use this online calculator can alleviate a great deal of pressure and frustration.
For more information or for guidance on how to address specific employee questions, please contact BCN Services at 1-800-891-9911.
Dani Austin, Payroll Supervisor