W-4 Guide for Household Employers
Form W-4 — Employee's Withholding Certificate
Understanding what the W-4 does, how your employee fills it out, and how you apply it to payroll withholding.
Important: The Employee Fills Out the W-4
Here is what you need to know as the employer:
- The W-4 determines how much federal income tax to withhold from each paycheck
- Federal income tax withholding is optional for household employers (unlike Social Security and Medicare)
- If both you and your employee agree to withhold, the employee completes the W-4
- You keep the W-4 on file -- do NOT send it to the IRS
- The employee can submit a new W-4 at any time to change their withholding
Step-by-Step Guide
Provide a blank Form W-4 to your employee at the time of hire (or whenever you both agree to start withholding). The W-4 determines how much federal income tax you will withhold from each paycheck. The employee fills it out based on their personal tax situation -- filing status, dependents, other income, and deductions.
Tips
- You can print the W-4 from the IRS website or direct your employee to fill it out online.
- If you use NannyLedger, the W-4 information can be entered directly into the employee setup wizard.
- Do not pressure the employee to fill out the W-4 a certain way -- it is their choice based on their tax situation.
The current W-4 (redesigned in 2020) has five steps. Not all steps are required. Only Steps 1 (personal info) and 5 (signature) are mandatory. Steps 2-4 are optional and allow the employee to fine-tune their withholding.
| Step | Section | Required? | Purpose |
|---|---|---|---|
| 1 | Personal Information | Yes | Name, address, SSN, filing status (Single, Married, Head of Household) |
| 2 | Multiple Jobs | No | If the employee (or spouse) has other jobs. Uses IRS estimator or worksheet. |
| 3 | Claim Dependents | No | Child tax credit and other dependent credits reduce withholding. |
| 4 | Other Adjustments | No | Other income (4a), deductions (4b), or extra withholding per period (4c). |
| 5 | Signature | Yes | Employee signs and dates the form under penalties of perjury. |
Once you have the completed W-4, use the employee's selections to determine how much federal income tax to withhold from each paycheck. The IRS provides withholding tables in Publication 15-T. The amount depends on the employee's filing status, pay frequency, and any adjustments from Steps 2-4 of the W-4.
Tips
- NannyLedger's payroll calculator applies W-4 withholding automatically based on the employee's selections.
- If you calculate manually, use the IRS Tax Withholding Estimator at irs.gov/W4App or the tables in Publication 15-T.
- Withholding is calculated per pay period -- weekly, biweekly, semimonthly, or monthly.
- If the employee only filled out Steps 1 and 5, withhold based on their filing status with no adjustments.
Retain the completed W-4 in your records. Do NOT send it to the IRS -- it stays with you as the employer. If the employee submits a new W-4, implement the changes as soon as practicable (typically within 1-2 pay periods) and keep both the old and new forms on file.
Tips
- Keep W-4 forms for at least 4 years after the tax becomes due or is paid, whichever is later.
- If the IRS requests a copy of an employee's W-4, you must be able to provide it.
- Digital copies are acceptable -- you do not need to retain the original paper form.
- When an employee leaves, retain their W-4 with their other employment records.