IRS (tax forms W-4, SSNs)

Sep 30, 2025 | Agencies, General Education, Hiring and Onboarding

When you hire an employee in the U.S., you also become a tax collector on behalf of the federal government. The Internal Revenue Service (IRS) requires employers to withhold the right amount of income, Social Security, and Medicare taxes from each paycheck. To do that, you need two key pieces of information: the employee’s W-4 form and their Social Security number (SSN).

Form W-4: Employee’s Withholding Certificate

The W-4 tells you how much federal income tax to withhold from an employee’s wages. Every new employee must complete one when they start a job.

Key points about the W-4:

  • Employees provide their filing status, dependents, and other income adjustments.

  • Employers use this information to calculate tax withholding.

  • Employees can update their W-4 at any time if their personal or financial situation changes.

  • Employers are required to keep W-4s on file—there’s no need to send them to the IRS, but you must be ready to produce them if requested.

Social Security Numbers (SSNs)

Employers must collect employees’ SSNs for tax reporting purposes. The SSN is used to:

  • Report wages to the IRS and Social Security Administration (SSA)

  • Withhold and pay Social Security and Medicare (FICA) taxes

  • Issue annual W-2 forms so employees can file their taxes

Without a valid SSN, employers cannot properly report or withhold taxes, which can lead to compliance issues.

Employer responsibilities with the IRS

  • Withhold the correct amount of federal income tax (based on the W-4)

  • Withhold and pay the employer’s share of Social Security and Medicare taxes

  • File payroll tax returns (Forms 941/944) quarterly or annually

  • Provide employees with W-2 forms each January, showing wages and taxes withheld

  • Use SSNs accurately when reporting wages and taxes

Common mistakes employers make

  • Not collecting a W-4 on the first day of employment

  • Using outdated W-4 forms (the IRS redesigned it in 2020)

  • Entering SSNs incorrectly, which can cause reporting errors with the IRS or SSA

  • Failing to withhold taxes properly, leading to underpayment penalties

  • Treating workers as independent contractors to avoid W-4 and tax withholding responsibilities

Penalties for noncompliance

Mistakes with W-4s, SSNs, or payroll tax reporting can result in:

  • IRS fines for incorrect or missing information on W-2s

  • Penalties and interest for late or unpaid payroll taxes

  • Liability for the “Trust Fund Recovery Penalty,” which can hold business owners personally responsible for unpaid taxes

How to stay compliant

  1. Always collect a completed W-4 on or before the employee’s first day.
  2. Verify SSNs and enter them correctly in payroll systems.
  3. Train payroll or HR staff to use the current W-4 form.
  4. File and pay payroll taxes on time, every time.
  5. Audit payroll records regularly to catch mistakes early.

How Kubera HR Solutions can help

At Kubera HR Solutions, we help employers set up proper payroll tax procedures, audit W-4 and SSN compliance, and train staff to avoid costly IRS errors. With our support, you can streamline onboarding, protect your business from penalties, and ensure every paycheck is accurate and compliant.