This article was last updated on 5/22/2019.

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:

1. 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 Allowance Certificate to indicate allowances, which affects how much federal income tax you withhold from an employee’s paycheck. The form includes information on marital status, number of dependents and additional withholding amounts.

2. When to complete:

I-9Form 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, because 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.

You must use the most current version of the I-9, dated 07/17/17 in the bottom left corner of the form. All previous versions are invalid.

3. 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.

Compliance Tip:
Employers should not give employees advice on how to complete the W-4. If an employee makes a poor decision based on your input, the company may be held liable in the event of a dispute. Rather, direct them to resources that can help, such as a printed or online tip sheet.

4. 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).

Although you don’t have to formally submit the I-9 and W-4 forms to the federal government, compliance is still necessary in case you’re ever inspected, audited or asked to provide related information about an employee.

5. Penalties for noncompliance:

I-9 — Not properly completing, retaining or making I-9s available for inspection could result in fines from $230 to $2,292 per form violation. If you knowingly hire, or continue to employ, an unauthorized worker, you could face civil penalties ranging from $573 to $22,927 per violation (depending on first, second or subsequent offenses).

W-4 — If an employee doesn’t fill out a W-4, you must withhold tax as if the employee were single with no allowances. Also, if the IRS identifies a problem with an employee’s withholding, it may issue a “lock-in” letter indicating the maximum number of allowances permitted. You then could be penalized for not honoring the lock-in requirement, or held liable for any back taxes.

  • A complete and accurate I-9 and W-4 is mandatory for every new hire.
  • The employee should fill out both forms on the first day of work.
  • As part of the I-9 process, you’ll also need to review acceptable documentation provided by the employee.
  • It’s important to mind the retention timeframes for both forms to avoid penalties.

How Easy Is It To Fill Out an I-9 or W-4 Form?

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 confident you’re doing everything right.