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Form W-4

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. If you do not complete the form, your status for federal tax withholding will default to single. 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 Form W-4. Usually your company follows the tax rates of supplemental income rather than your W-4 rate.

For more on Form W-4, see the FAQ about it elsewhere on this website. For more on withholding rates for supplemental income, see a another FAQ.

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