{"id":357,"date":"2017-05-23T20:20:15","date_gmt":"2017-05-23T20:20:15","guid":{"rendered":"http:\/\/www.hrdirectapps.com\/blog\/?p=357"},"modified":"2019-05-22T14:30:24","modified_gmt":"2019-05-22T14:30:24","slug":"5-critical-considerations-when-managing-i-9-and-w-4-forms-for-new-hires","status":"publish","type":"post","link":"https:\/\/www.hrdirectapps.com\/blog\/5-critical-considerations-when-managing-i-9-and-w-4-forms-for-new-hires\/","title":{"rendered":"5 Critical Considerations with the I-9 and W-4 Forms for New Hires"},"content":{"rendered":"

This article was last updated on 5\/22\/2019.<\/em><\/p>\r\n\r\nYou\u2019ve made it through the recruiting<\/a>, interviewing and selection process \u2014 and now you have a bright new hire in your midst. It\u2019s day one and you have high hopes your new employee will hit the ground running.\r\n\r\nBut 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\u2019s important to understand the specifics around them to ensure you\u2019re in compliance.\r\n\r\nHere\u2019s what you need to know, and do, to get on firm legal footing from day one:\r\n

1.\u00a0What it is:<\/h2>\r\n

I-9<\/strong> \u2014 You\u2019re required under the Immigration and Reform Control Act to use Form I-9, Employment Eligibility Verification<\/em> to confirm an employee\u2019s eligibility to work in the United States. This includes reviewing certain legal documents, such as driver\u2019s license, Social Security card, birth certificate or green card, to establish identity and eligibility.<\/p>\r\n\r\n

W-4<\/strong> \u2014 The Internal Revenue Service (IRS) requires every employee to complete the Form W-4. Employee\u2019s Withholding Allowance Certificate to indicate allowances, which affects how much federal income tax you withhold from an employee\u2019s paycheck. The form includes information on marital status, number of dependents and additional withholding amounts.<\/p>\r\n

2.\u00a0When to complete:<\/h2>\r\n

I-9<\/strong> \u2014 Form I-9<\/a> 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\u2019ll also need to check the documents the employee provides from the \u201cList of Acceptable Documents.\u201d (Section 3 is completed, as necessary, to update or reverify an employee\u2019s work authorization.)<\/p>\r\n\r\n

W-4<\/strong> \u2014 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\u2019s 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.<\/p>\r\n

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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.<\/div>\r\n<\/div>\r\n

3.\u00a0How to maintain:<\/h2>\r\n

I-9<\/strong> \u2014 Your work is done once you\u2019ve 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 \u2014 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.<\/p>\r\n\r\n

W-4<\/strong> \u2014 You need to maintain up-to-date W-4s that include recent changes to an employee\u2019s personal or financial situation (such as moving, marriage, children or divorce), so it\u2019s a good idea to have employees resubmit a W-4 each year.<\/p>\r\n

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Compliance Tip:<\/div>\r\nEmployers should not give employees advice on how to complete the W-4.<\/a> 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.\r\n\r\n<\/div>\r\n

4.\u00a0How long to keep:<\/h2>\r\n

I-9<\/strong> \u2014 You must keep the I-9 on file for three years after the employee\u2019s first day of work or one year after termination \u2014 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\u2019re kept past the retention timeframe.<\/p>\r\n\r\n

W-4<\/strong> \u2014 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).<\/p>\r\n

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Although you don\u2019t have to formally submit the I-9 and W-4 forms to the federal government, compliance is still necessary in case you\u2019re ever inspected, audited or asked to provide related information about an employee.<\/div>\r\n<\/div>\r\n

5.\u00a0Penalties for noncompliance:<\/h2>\r\n

I-9<\/strong> \u2014 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).<\/p>\r\n\r\n

W-4<\/strong> \u2014 If an employee doesn\u2019t 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\u2019s withholding, it may issue a \u201clock-in\u201d 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.<\/p>\r\n

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KEY TAKEAWAYS<\/div>\r\n