When Do I Need to Submit Form W-4 to the IRS?

IRS Form W-4 is a certificate that the federal tax agency requires all new employees to fill out and return to their employers. The W-4 lists the number of withholding allowances that the employee wishes to claim. The greater the number of allowances, the smaller the withholding amount. The W-4 also allows employees to claim exemption from withholding entirely. In the past, the IRS required employers to submit W-4s for certain employees, but that is no longer the case.

At one time, the IRS required employers to submit W-4 forms when an employee earning at least $200 in salary claimed more than 10 withholding allowances. In 2010, one allowance exempted $3,650 of the employee's wages from income tax. The IRS also required employers to file the W-4s for employees who claimed exemption from federal taxes entirely, by reason of their filing status, household income, deductions and exemptions.

Employers had to follow IRS instructions to withhold according to a limit on the number of exemptions it allowed the employee. Employees had to revise their W-4s if they wished to claim more exemptions than were allowed, and provide a written statement explaining the request. The request had to be approved by the IRS before the employer could adjust the withholding according to the employee’s wishes.

New regulations passed in 2005 changed the guidelines for filing W-4s with the Internal Revenue Service. Although the law still requires employees to submit W-4s, it does not require automatic filing of the forms on the part of the employer under any circumstances.

The IRS can still send a written request for an employer to submit a W-4 for a specified employee. The agency claims that it now uses other means to determine if an employee is claiming too many exemptions and having too little tax withheld from his paychecks. On receipt of the W-4, the IRS can request that an employer increase withholding in appropriate cases, through the use of a "lock-in" letter.

On deciding that the withholding is insufficient for a specific employee, the IRS issues a "lock-in" letter. The letter gives the maximum number of allowances for that particular employee, and the date on which the employer must begin withholding according to that number. Any future changes in withholding must be approved by the IRS. An employee copy of the lock-in letter must be furnished to the employee or, if appropriate, the employer must inform the IRS that the employee no longer works for the company. The lock-in letter gives the employee a grace period during which he may submit a new W-4 and supporting statement.