Payroll forms for new employees: the new-hire packet

What goes in the packet

Every new hire needs the same core set. Form W-4 sets federal income tax withholding. Form I-9 verifies identity and work authorization: the employee completes Section 1, and the employer completes Section 2. The state new hire report goes to a state directory. The direct deposit authorization and policy acknowledgments stay in the personnel file.

Send the packet as one request list, not as separate emails. In Usual, the client portal shows the client a list of open requests and accepts uploads, so the W-4, the direct deposit form and the acknowledgments can sit in one request. Section 2 of the I-9 is the exception, because the employer completes it after reviewing the employee's documents, and an upload alone does not finish it.

Form W-4: federal withholding

The IRS says to ask all new employees for a signed Form W-4 when they start work, and to make the form effective with the first wage payment. The 2026 Form W-4 is for use in 2026. For a hire whose first paycheck falls in 2027, check the revision date on the IRS form before using it.

Decision rule: if the employee has a working spouse or a second job, point out the multiple jobs part of the form and suggest the employee complete it. Step 2 is optional, so a signed form is valid without it. Withhold from the signed form as submitted and do not complete Step 2 for the employee.

Send this: "Please sign and return the attached 2026 Form W-4 before your first paycheck." Federal withholding starts with the form you return.

The IRS recommends completing a new Form W-4 each year and when personal or financial circumstances change. A replacement form has a firmer rule. The employer must begin withholding no later than the start of the first payroll period ending on or after the 30th day after receiving it. Date-stamp every W-4 on receipt so the 30-day count can be shown.

Form I-9: the timing that gets missed

Section 1 is due no later than the employee's first day of employment. The employee may complete it any time after accepting the job offer. Section 2 is the employer's part, and it is due within 3 business days of the hire date. The hire date is the first day of work for pay, not the date of the offer letter.

Worked example. An employee starts on a Monday. Section 1 is due that Monday. Section 2 is due the Thursday of that week, because Tuesday is business day one, Wednesday is business day two and Thursday is business day three. A Friday start makes Section 2 due the Wednesday of the following week.

If the job lasts less than 3 days, Section 2 is due no later than the first day of work for pay. A one-day temp job has a one-day deadline, so the Section 1 form has to be back before the shift starts.

Common failure: the firm sends the I-9 with the offer letter and treats the signed Section 1 as the whole job. The employer still has to review the documents the employee presents and complete Section 2. Fix: put Section 2 on the first-day checklist with a named person, and diarize the third business day.

Keep each I-9 for three years after the date of hire or one year after employment ends, whichever is later. The current form edition is dated 01/20/25, so note the edition on the file. Track the retention date from the termination date, because the later of the two dates controls.

State new hire reporting

Federal law requires each employer to report every new hire to a state directory. The outer limit is 20 days after the hire date, and a state may set a shorter window. The report must include the employee's name, address and social security number, the date services for pay were first performed, and the employer's name, address and EIN.

Worked example. Count 20 days forward from the hire date on the calendar. The statute counts days and does not say business days, so count calendar days, and check the state's new hire site for a shorter window before relying on the federal count.

A multistate employer that reports electronically may designate one state to receive its reports, and must notify the Secretary in writing of the state it designates. Decision rule: if the client has employees in more than one state, confirm the designated state with the client and the file before reporting a hire in a second state.

Some states also have their own withholding certificate, separate from the federal W-4. Look up the revenue site for each employee's work state, and do not assume the federal W-4 covers state tax. Failure mode: the report goes out under the owner's social security number or an old EIN after an entity change. Fix: confirm the EIN against the IRS assignment letter in the client file before the first report.

Direct deposit authorization

Under Regulation E, a preauthorized electronic fund transfer from a consumer's account may be authorized only by a writing signed or similarly authenticated by the consumer. Treat the direct deposit form as that writing. Keep it signed, and keep the bank letter or voided check the employee provides with it.

Regulation E also says no person may require a consumer to open an account with a particular institution as a condition of employment. The form should let the employee name any bank that accepts direct deposit, not one bank the client prefers.

Send this: "Please complete the attached direct deposit form with your bank's routing number and your account number, and sign it." Ask for a voided check or a bank letter with it.

Failure mode: a bank account number arrives by email or chat, or a changed account number arrives from an address that looks like the employee's. Fix: change bank details only through the signed form, and confirm any change by calling a number already on file, never a number in the message. Decision rule: if the bank form is not back before the first payday, pay that cycle by check, record the reason and do not hold the paycheck.

Benefit enrollment and policy acknowledgments

Benefit enrollment runs on the plan's deadline, not on the payroll calendar. The carrier or plan document sets the enrollment window, so get it before sending the request. Put the window date in the new-hire checklist and give the employee the date in writing.

A pre-tax or after-tax deduction needs a signed election before the first deduction. Ask for a form that names each deduction, the amount per paycheck and the start date. A deduction taken without a signed election is hard to defend in a payroll review.

Policy acknowledgments are a signed and dated receipt for the handbook, the timekeeping policy and the expense policy. Name the version in the acknowledgment, for example "Employee Handbook, revision dated January 2026." Keep the signed page in the personnel file.

Failure mode: an acknowledgment covers a handbook the employee never received. Fix: send the handbook with the acknowledgment in the same request, so the signed page refers to a document the employee had when signing.

Ontario equivalents for Canadian-linked clients

For a client with an employee who works in Ontario, the federal form is the TD1 and the provincial form is the TD1ON. The CRA titles the 2026 forms "TD1 2026 Personal Tax Credits Return" and "TD1ON 2026 Ontario Personal Tax Credits Return." Both sit under the TD1 forms for pay received on January 1, 2026 or later.

The CRA lets employers send a web link or create electronic TD1 forms in place of paper copies, so the signed copy still goes in the personnel file.

This page covers US federal rules. A US client with an Ontario employee needs the Canadian payroll side for the other Canadian deductions, which this guide does not cover.