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What is a W-4 tax form?

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A W-4 tax form is officially referred to as an Employee’s Withholding Allowance Certificate. It is a document US employees need to fill out to provide to determine the correct amount of federal income tax to withhold from an employee’s paycheck.

This form is often filled out when an employee starts the job, but it can also be updated depending on life events and work advancement.

Other countries have similar concepts to the W-4 form, though with small differences. In the UK, for example, employees are provided with a P45 when they leave their job (which they give to their next employer). They receive a P60 form at the end of the tax year if they are in employment at the time.

Examples of what’s included in a W-4 form

  • Personal information
  • Number of allowances
  • Additional withholding
  • Multiple jobs
  • Exemptions
  • Signature and date

Difference between W-4 forms and W-2 forms

W-4s are completed by employees and are used to calculate how much federal income tax to withhold. A W-2, meanwhile, is a report filled out by the employer and given to the employee at the end of each year – summarizing total earnings, plus the amount of taxes withheld from salaries.

Juggling a global workforce & W-4 forms

The concept of the W-4 form isn’t unique to the US. Several countries have similar forms that need to be filled out by the employee to determine how much of a salary to withhold for taxes.

Managing global workforce with all its differences, and staying organized in the process can be challenging. Without the proper system in place, it can be time consuming and can leave the employer susceptible to errors, leading in turn to fines and penalties.

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