In U.S. personal finance, IRS Form W-4 tells an employer how much federal income tax to withhold from an employee’s pay.
An employee generally completes Form W-4 when starting a job and may submit an updated form after a change in circumstances. The form asks for filing-status information and adjustments such as other income, deductions, or extra withholding. Employers use the employee’s responses with payroll tables to calculate federal income-tax withholding.
Form W-4 is not the same as Form W-2. A W-4 provides instructions to the employer during the year, while a W-2 reports annual wages and tax withheld after the year ends. Form 1040 is the individual federal income-tax return used to calculate final tax liability.
Withholding is a prepayment of tax, not a separate tax. If too little is withheld, a taxpayer may owe money when filing; if too much is withheld, the excess generally becomes part of a refund after the return is processed.