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This is the IRS form that determines how much federal withholding tax will be deducted from your paycheck, at least from your salary. You complete it when you are hired, and in the form you list your withholding allowance(s). If you do not complete the form, your status for federal tax withholding will default to single and you will claim no allowances. You want to submit a new Form W-4 whenever your personal or financial situation changes.
Generally, when a company withholds federal income tax on supplemental wage payments from stock compensation, it can choose to withhold at the flat supplemental rate or at the payroll rate according to your aggregate income and allowances on Form W-4. Usually your company follows the tax rates of supplemental income rather than your W-4 rate.
For more on withholding rates for supplemental income, see a related FAQ.
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