Hiring new employees requires employers to gather information and document each employee’s eligibility to work and tax information. Business owners protect themselves and the people they hire by meeting their legal obligations to have employees fill out new hire paperwork and keep accurate and up-to-date records.
At CMP, our clients rely on us to provide guidance and information about the various types of documentation that relate to their employment, income, and taxes. We’ve created this guide to help you understand new employee tax essentials.
What Forms Do New Employees Fill Out For Taxes?
There are several forms that you may need to complete as a new employee. It’s important to understand the requirements and purpose of each one.
Form W-4, Employee’s Withholding Certificate
Form W-4 is required for all regular employees but not for contract employees. This form tells your employer how much to withhold from your taxes to pay your income tax, Social Security tax, and Medicare tax. It’s essential for your tax liability to be reflected accurately in your withholding. Your employer will use Form W-4 to create your W-2 form, which you’ll need to file your tax return.
If you have only one job, Form W-4 is easy to complete. You’ll need to choose the correct tax filing status from the following options.
- Married Filing Separately
- Married Filing Jointly
- Head of Household
You’ll also be asked to estimate your deductions if you plan to itemize. If you have two or more jobs, you may use the worksheet included with the form to authorize your employer to withhold additional taxes as needed. If you have more than one employer that’s withholding taxes, you’ll need to complete W-4 forms for each of them.
Keep in mind that if your marital status has changed, you may still be able to file as married, depending on your circumstances. For example, if your spouse died during the tax year, you can still file as a surviving spouse.
Form I-9, Employment Eligibility Verification Form
Form I-9 isn’t a tax form, but it’s required for employment. The form is what you (and ultimately your employer) will use to prove that you’re eligible to work in the United States, and it’s a requirement for both citizens and non-citizens.
When completing the form, you’ll need to specify whether you’re a citizen, a non-citizen national, a permanent resident, or a non-citizen who’s authorized to work in the United States. You’ll also need proof of your identity and employment authorization as outlined on page two of the form. Some forms of ID, such as a US Passport, can fulfill both requirements.
Form W-9, Request for Taxpayer Identification Number and Certification
We’ve included Form W-9 on this list, but technically, it’s not used by employees. Instead, it’s used to create Form 1099 for contract workers. If you’re not an employee, you’ll need to provide your Social Security Number (SSN) or Taxpayer Identification Number (TIN) on Form W-9.
Any company you’re working for should ask you for a signed W-9 the first time they hire you to do work for them. In addition to providing your TIN, you’ll also need to disclose whether you’re doing business as an Individual or Sole Proprietor, an S Corporation, a C Corporation, or a Partnership or Trust.
State Tax Withholding Forms
We’ve talked about federal income tax withholding. If you live in a state where there’s a state income tax, then you may need to fill out state tax withholding forms when you’re hired by a new employer.
Not every state requires a separate W-4 for employees. Let’s look at three states as examples.
Utah employers use the Federal version of Form W-4 to determine employee income tax withholding. That means that if you’re hired by a Utah employer, you’ll only need to fill out one Form W-4 to specify your tax withholding.
Nevada doesn’t have a state income tax. If you live or work in Nevada, you’ll need to complete a federal Form W-4 but no state version, and you won’t be required to pay state income taxes.
California has a state income tax and requires employees to complete the Employee’s Withholding Allowance Certificate when they’re hired.
Because these forms are different for each state, we won’t list them all here. Your employer should provide the necessary forms for you to complete. If you’re self-employed, we recommend researching which forms are required and making sure that you’ve provided everything necessary to avoid tax problems down the line.
Local Tax Withholding Forms
It’s rare, but some counties and municipalities may impose an income tax on people who live and work there. Again, your employer should provide any necessary forms when you report for your first day of work.
If you’re wondering whether your county or city has an income tax, you can refer to this list. Only about a third of US states allow counties or cities to charge an income tax, and the rates are typically lower than both the state and federal income tax rates.
Direct Deposit Forms
The final form you’ll be asked to complete when you’re hired is a direct deposit form. Your employer can’t require you to sign up for direct deposit, but we recommend it. In most cases, direct deposit allows you to get access to your pay immediately, sometimes even before you receive your pay stub.
You may also need to provide a canceled check to set up your direct deposit. Your employer will tell you what documentation is needed. Keep in mind that it may take one or two pay cycles for everything to get set up, which means you may get one or two paper checks before your pay is deposited electronically.
Navigating New Employee Tax Essentials: Essential Forms to Get Started
To help you get the forms you need, here are links to the essential forms we’ve covered in this guide.
For Form W-4, instructions are included with the form. To access them, scroll down to page 2 of the linked PDF.
As is the case with Form W-4, the instructions for Form W-9 are included in the same PDF as the form.
Our Tax Professionals Can Help with Individual Tax Filing
The forms you’ll be required to fill out when hired by a new employer may vary from state to state. They’re fairly simple. The most important thing to do is to provide the correct Social Security Number or TIN, filing status, and number of dependents. If your employer withholds too much, you’ll get a refund; if they withhold too little, you’ll owe the IRS and/or state taxing agency money.
Dealing with tax forms can be confusing, and the same applies to filing your state and federal income taxes. If you need assistance, our tax professionals at CMP are here to help. Learn about our income tax services!