You’ve made it through the recruiting, interviewing and selection process — and now you have a bright new hire in your midst. It’s day one and you have high hopes your new employee will hit the ground running. But wait! Before you bring your new hire onboard, you need to tackle two critical forms: the I-9 for work authorization and the W-4 to establish tax withholding. Both forms are mandatory, so it’s important to understand the specifics around them to ensure you’re in compliance.
Here’s what you need to know, and do, to get on firm legal footing from day one:
- What it is:
I-9 — You’re required under the Immigration and Reform Control Act to use Form I-9, Employment Eligibility Verification to confirm an employee’s eligibility to work in the United States. This includes reviewing certain legal documents, such as driver’s license, Social Security card, birth certificate or green card, to establish identity and eligibility.
W-4 — The Internal Revenue Service (IRS) requires every employee to complete the Form W-4, Employee’s Withholding Certificate to determine how much federal income tax you withhold from an employee’s paycheck. The form includes information on filing status, number of dependents and extra withholding amounts.
- When to complete:
I-9 — The I-9 is a three-part document. The employee fills out Section 1 on the first day of work, and you must complete Section 2 within three days of this date. You’ll also need to check the documents the employee provides from the “List of Acceptable Documents.” (Section 3 is completed, as necessary, to update or reverify an employee’s work authorization.)
W-4 — The new hire should fill out a W-4 on or before the first day of work. Be certain the employee signs the form, as it’s considered invalid without a signature. You must process the W-4 by the start of the first payroll period ending on or after the 30th day from the date received.
Don’t tell employees how to complete the W-4: otherwise, you could be held liable for any disputed information later. Instead, direct them to resources that can help, such as a printed or online tip sheet.
- How to maintain:
I-9 — Your work is done once you’ve completed an I-9 for U.S. citizens and lawful permanent residents. For foreign workers with temporary authorization, however, the employee must indicate the expiration date under Section 1 — and you must reverify eligibility on or before this date. You can do this by completing Section 3 or filling out a new I-9 altogether.
W-4 — You need to maintain up-to-date W-4s that include recent changes to an employee’s personal or financial situation (such as moving, marriage, children or divorce), so it’s a good idea to have employees resubmit a W-4 each year.
- How long to keep:
I-9 — You must keep the I-9 on file for three years after the employee’s first day of work or one year after termination — whichever is later. After that, shred and discard the new hire paperwork because you could still be fined for improperly completed forms, even when they’re kept past the retention timeframe.
W-4 — The IRS requires you to keep employment tax records for at least four years after taxes were paid. In addition to W-4 forms, this includes records of employee wages and tips (if applicable).
- Penalties for noncompliance:
I-9 — Not properly completing, retaining or making I-9s available for inspection could result in fines from $252 to $2,507 per form for substantive violations or uncorrected technical errors. You could also face significant civil penalties for knowingly hiring, or continuing to employ, an unauthorized worker.
W-4 — If an employee doesn’t fill out a W-4, you must withhold tax as if the employee were single or married filing separately with no other entries on step 2, 3, or 4. Also, if the IRS identifies a problem with an employee’s withholding, it may issue a “lock-in” letter notifying you of the employee’s proper filing status and provide you with withholding instructions. You then could be penalized for not honoring the lock-in requirement — or held liable for any back taxes.
Confidently Comply with Federal Form Requirements When Onboarding Employees
With everything on your plate to get a new hire up and running, you need a break with the required paperwork for new employees. A dedicated I-9 & W-4 app can help you complete the forms — and store important data with less hassle. The software will walk you through the process, step by step, so you can be certain you’re doing everything right.