Taxes to Withhold for New Employees


When you hire a new employee, there are a number of steps you must complete. After you verify the employee’s eligibility to work in the United States by completing Form I-9, you’ll need to ask the employee to complete Form W-4 to determine the federal tax withholding amount.

Next, you’ll need to record the employee’s name, address and Social Security number. Once you take care of federal tax withholding, you’ll likely be required to calculate state withholding since 41 states and the District of Columbia collect state taxes. If your local government requires additional withholding, you’ll need to make sure you comply with that as well. Some states require a specific local tax form.

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If your new employee lives in one state and works in another, you’ll generally be required to review the tax requirements of the employee’s resident state since there may be additional withholding responsibilities.

As you can see, new employee tax withholding can get rather complicated. For that reason, many employers chose to outsource payroll to a professional payroll service, which can simplify new employee processing and eliminate the risk of incurring tax penalties.

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Angela Cordle

Angela Cordle

Angela Cordle is the EVP of GoSmallBiz and Tarkenton Financial. In this role, she serves as the Human Resources Director, overseeing the provision of HR services, policies, and programs for the company. She brings practical and experiential knowledge of HR best practices to small businesses. Angela is also an Investment Advisor Representative and Executive Vice President of Tarkenton Financial, LLC. In addition to working with advisors throughout the United States, Angela works with clients exclusively in the Atlanta area to educate and assist them in preparing for retirement. Angela holds a BBA from the Terry College of Business at the University of Georgia, her Series 65 investment license as well as being insurance licensed in all 50 states.