I9 vs W4: Do You Understand the Difference?

After weeks of hard work recruiting, screening, and interviewing applicants, you have a bright, new hire in your midst. You’d love to let them hit the ground running, but, first, you must complete some critical paperwork. Be certain you understand the difference between two mandatory forms: the I-9 for work authorization and the W-4 to establish tax withholding.

Both the employee and the employer share the responsibility of completing these forms accurately. Federal law mandates the completion of these forms to ensure compliance with legal requirements. But they’re very different forms that serve very different functions, so in this guide, we’ll walk you through the basics of what these forms are.

Understanding I-9 and W-4 Forms

I-9 and W-4 forms are two essential documents that employers in the United States must obtain from their employees. While they serve different purposes, both forms are crucial for ensuring compliance with federal laws and regulations.

The I-9 Form Explained

The I-9 form, also known as the Employment Eligibility Verification form, is used to verify an employee’s identity and employment authorization. It is a mandatory document for all new employees hired to work in the U.S., and employers are responsible for completing and keeping it on file. Issued by the U.S. Citizenship and Immigration Services (USCIS), the I-9 form ensures that employers have verified the employment eligibility of each employee.

As part of an I-9 form, the employee will need to provide verification documents from List A alone or a combination of documents from both List B and List C. Here’s a quick glance at how those lists work:

• List A: List A items are documents that verify an employee’s identity and work eligibility in the same form. Common documents include a U.S. passport or passport card, a permanent residence card, and more.
• List B: List B items are documents that establish identity for an employee, and they have to be filed in tandem with an item from List C. Common List B documents include a state driver’s license, school ID, military ID, voter’s registration card, and more.
• List C: List C items establish an employee’s right to work in the U.S., and they have to be filed alongside a List B item. Common List C documents include a birth certificate, U.S. Social Security card, Form I-197, and more.

The W-4 Form Explained

On the other hand, the W-4 form, also known as the Employee’s Withholding Certificate, is used to determine the amount of federal income tax to withhold from an employee’s paycheck. The form includes questions about an employee’s marital status, number of dependents, and other factors that affect their tax withholding. Employers use the information provided on the W-4 form to determine the correct amount of taxes to withhold from an employee’s paycheck.

Key Differences Between I-9 and W-4

While both I-9 and W-4 forms are important documents, there are key differences between them. The main difference is the purpose of each form. The I-9 form is used for employment eligibility verification, while the W-4 form is used for federal income tax withholding purposes.

Another difference is the information required on each form. The I-9 form requires employees to provide personal information, such as their name, date of birth, and Social Security number, as well as documentation to establish their identity and employment authorization. The W-4 form, on the other hand, requires employees to provide information about their filing status, number of dependents, and other factors that affect their tax withholding.

When to Complete Form I-9 and W-4

These two forms don’t have the exact same completion requirements, so it’s essential to make sure you’re aware of the “due dates” for each form.

Form 1-9 Due Date

With this three-part document, the employee fills out Section 1 on the first day of work, and you must complete Section 2 within three days of their start date and verify the employee’s eligibility to work in the U.S. You’ll also need to check the documents the employee provides from the “List of Acceptable Documents.”

A quick note: Section 3 is completed, as necessary, to update or reverify an employee’s work authorization. So it’s not an immediate requirement.

Form W-4 Due Date

The new hire should fill out an employee’s withholding allowance certificate (W-4) on or before the first day of work. Be certain the employee signs the form, because it’s considered invalid without a signature. You must process the W-4 by the start of the first payroll period ending on or after the 30th day from the date received.

Recordkeeping Considerations

After you have these important forms filled out, you’ll need to keep them as part of your records for a while. Here’s what you can expect for each form type.

I-9 Recordkeeping

Once you’ve completed an I-9 for U.S. citizens and lawful permanent residents, you’re done. For foreign workers with temporary authorization, however, the employee must indicate the expiration date under Section 1 — and you must reverify eligibility on or before this date. You can do this by completing Section 3 or filling out a new I-9 altogether. It is crucial to document key details from these acceptable documents during the employment eligibility verification process.

You must keep the I-9 on file for three years after the employee’s first day of work or one year after termination — whichever is later. After that, shred and discard the new hire paperwork because you could still be fined for improperly completed forms, even when they’re kept past the retention timeframe.

W-4 Recordkeeping

You need to maintain up-to-date W-4s that include recent changes to an employee’s personal or financial situation (such as moving, marriage, children, or divorce), so it’s a good idea to have employees resubmit a W-4 each year.

The IRS requires you to maintain employment tax records for at least four years after taxes were paid. In addition to W-4 forms, this includes records of employee wages and tips (if applicable).

Employer Responsibilities

Employers have several responsibilities when it comes to I-9 and W-4 forms. For I-9 forms, employers are responsible for:

• Ensuring that all new employees complete the form on their first day of work.
• Examining the documentation provided by the employee to establish their identity and employment authorization.
• Completing and signing Section 2 of the form within three business days of the employee’s first day of work.
• Keeping the completed form on file for three years after the date of hire or one year after employment is terminated, whichever is later.

For W-4 forms, employers are responsible for:

• Providing the form to new employees on their first day of work.
• Ensuring that the form is completed and signed by the employee.
• Using the information provided on the form to determine the correct amount of taxes to withhold from the employee’s paycheck.
• Keeping the completed form on file for the appropriate amount of time

Ensuring Privacy and Security

Employers must ensure that they handle I-9 and W-4 forms in a way that protects the privacy and security of their employees’ personal information. This includes:

• Keeping the forms in a secure location, such as a locked file cabinet or a secure online storage system.
• Limiting access to the forms to only those who need to see them.
• Ensuring that the forms are not shared with unauthorized individuals or organizations.
• Destroying the forms in a secure manner, such as by shredding or using a secure online destruction service, when they are no longer needed.

By following these best practices, employers can ensure that they are handling I-9 and W-4 forms in a way that is compliant with federal laws and regulations, while also protecting the privacy and security of their employees’ personal information.

Streamline the onboarding process and avoid costly mistakes

A dedicated I-9 and W-4 app can help you complete mandatory forms for new hires with less hassle. The software guides you through the process, step by step, for a completely automated, paperless and accurate process. While you don’t have to use a software like this, it can be immensely helpful.

Conclusion

Understanding the differences between the I-9 and W-4 forms is crucial for ensuring compliance with federal laws and facilitating a smooth onboarding process. These forms serve distinct purposes — verifying employment eligibility and determining tax withholding — but both are integral to your responsibilities as an employer.

By staying organized, adhering to recordkeeping requirements, and protecting employee information, you can confidently navigate these requirements and focus on welcoming your new hire.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.