Why it matters
A missing or outdated W-4 can leave an employee with too little or too much tax withheld. The form also changes when the employee's filing status, dependents or other income changes.
Example
A new employee completes Form W-4 on the first day. The payroll provider enters the filing status and the adjustments, and the first paycheck withholds federal income tax based on the form.
Related terms
Questions about Form W-4
Does Form W-4 affect Social Security and Medicare tax?
No. FICA is calculated separately from the W-4. The W-4 controls federal income tax withholding.
When should an employee update Form W-4?
After a change in filing status, dependents, other income or a significant change in deductions. The employee can update it at any time.