An employer is required to obtain from each employee a completed Form W-4, Employee's Withholding Certificate, in order to determine the correct federal income tax to withhold from each paycheck.
The Form W-4 has 5 steps:
Personal Information: This step will be completed with information that identifies you and indicates whether you plan to file your taxes as a single person, a married person, or a head of household.
Amount withheld: This step will identify if your employer should withhold more or less than the standard amount based on having multiple jobs or having a working spouse. It's important that each employer be able to calculate your withholdings based on your total income (you + spouse) and not solely the income from the job for which the Form W-4 is being completed.
Dependents: This step will indicate the number of children or other dependents that you expect to claim on your tax return.
Other Adjustments (Optional)*: This section allows you to indicate other reasons to withhold more or less from your paycheck. Most individuals will not need to complete this section.
Signature. This step will have you execute your Withholding Certificate.
Your Form W-4 is retained in your file by your employer and is not required to be sent to the IRS. If nothing has changed in your job, income, family situation, you may not need to complete a new Form W-4 each year, unless requested by your employer.
Read the full details here:
This post may not contain a complete analysis of the tax issues discussed herein and does not represent official conclusions or advice regarding the matter.