Form W-4, the Employee’s Withholding Certificate, is used by business owners to determine how an employee's federal income taxes should be withheld. In the event of a change in an employee's filing status (such as a marriage), Form W-4 should always be updated, even if the change occurs mid-year.
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The amount of taxes withheld from any given paycheck can depend on factors that can change from year to year. These factors include, but are not limited to:
- Gross wages and pre-tax deductions
- Pay frequency
- Marital status
- Multiple jobs
- Dependents
- Other income
- Deductions
- Extra withholding
When in doubt, it’s best to speak to a tax professional or consult Publication 15-T when filling out the W-4. The IRS has also provided a tax estimator to assist employees with their Form W-4 selections.
Getting started
When adding a new employee, the updated Form W-4 will display by default.
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If you selected to invite this employee to fill out their personal information when entering their basics during the previous step, you don't need to enter their W-4 information.
IMPORTANT: Do not use Legacy W-4 for new employees
In 2020, the IRS revised Form W-4. If you're new to OnPay, and you're entering the W-4 information of an employee you hired before January 1, 2020, you may select Use Legacy W-4. For all employees hired after January 1, 2020, you must use the 2020 W-4.
Filing status
Employee's filing status can be found in Box (c) of Step 1 of the Form W-4.
"Only 2 jobs"
Only select True if this employee has two or more jobs. If you are this employee's only current employer, choose False.
Dependents amount
There are generally two types of dependents that an employee can claim:
- A child under the age of 17
- An individual, related or otherwise, that relies on you financially
For help qualifying an employee's dependents, refer to IRS Publication 501.
Add the two amounts from Step 3 of the employee's W-4, and enter the total amount under “Dependents Amount”. If the employee has no dependents, leave this field blank.
Other income
If the employee has additional income from another source, and taxes are not being withheld (such as interest, or dividends) they may choose to have you withhold additional dollars from their pay to cover any taxation they might face at the end of the year. Do not use this field to record any expected payment issued by you or your organization.
Deductions
Record the total of itemized deductions from box 4(b). If the employee is using the standard deduction, leave this field blank.
Extra Withholding
If the employee expects a tax change later in the year, or if they just want a bigger refund, they may choose to have a fixed amount of additional taxes withheld. This is different than "Other income" in that the employee chooses the exact amount of pay to be withheld, as many factors can impact tax withholding.
Updating the W-4 in an employee's profile
If an existing employee wishes to submit their withholding information using the new Form W-4, you'll need to update their employee profile in OnPay, too.
In the employee's profile, click Tax Withholding.
If the Legacy W-4 was previously used for this employee, click Switch To 2020 W-4 to re-enter the employee's information using the current Form W-4.