Are Forms W4 mandatory?

Are Forms W-4 mandatory to file? The Employee’s Withholding Certificate is the tax form that employees use to provide information to their employers about how much federal income tax needs to be withheld from their wages.

Form W4 isn’t mandatory for employees but it should be filed by all employees so that the employer would know how much tax to withhold. Without Form W4, the employer wouldn’t know the tax situation of the employee.

Under the IRS guidelines, Form W4 isn’t required by an employer to withhold tax. If an employee doesn’t fill out Form W4, the employer will withhold tax at the highest single rate to ensure that the employee isn’t subject to the underpayment penalty.

Whether or not this is a good or a bad thing isn’t debatable. If you fit the description of a taxpayer who’s single and pays the highest rate which is a single taxpayer that has no dependents and only claims the standard deduction on a tax return, not much will change. However, if you have dependents or filing a joint return or itemize deductions, your employer will withhold more tax than necessary.

That said, not filling out Form W4 and letting your employer withhold federal income tax at the highest single rate isn’t going to be any help at all. You will be reducing your take-home pay instead. In a situation like this you will just be loaning your money away to the government and only to get it back when you file a tax return.

Having all this said, although Form W4 isn’t mandatory to file for any tax year, fill out one so that your employer knows how much tax to withhold from your income when processing payroll.