- Ask each of your employees to fill out a W-4 form when they begin working for you and again if one of your workers' tax situation changes, such as if she marries or has a child. Find W-4 forms online at the IRS website or call the agency and ask it to mail copies. File the information that each employee enters on her W-4 form with your payroll records so you can easily refer to it when you calculate payroll.
- Call the IRS and register as an employer when you first hire employees. Once the agency has you listed as an employer, it will send copies of tax deduction charts at the beginning of each calendar year, in a pamphlet titled "Employer Circular E." Alternately, search online at the IRS website for federal income tax withholding tables.
- Employer tax deduction charts are divided into pages corresponding to different filing statuses and payroll periods such as "single" and "weekly pay period." The horizontal columns correspond to the number of withholding allowances that an employee claims, and the lines on the vertical axis of the page correspond to wage ranges such as $240 to $250. Find the page that corresponds to the length of your pay period and the filing status of a particular employee, and then locate the column and line that corresponds to the withholding allowances he has claimed and the amount of money he has earned.
- Federal tax deduction charts are based on the assumption that each employee earns the same amount in wages during each pay period throughout the year. For example, if your employee takes home $600 per week, then the tax deduction chart will instruct you to withhold the percentage of income tax he will owe if he earns roughly $30,000 per year. An employee whose wages and hours vary throughout the year will probably get a tax refund when he files his federal income tax return because you have withheld some of his federal income tax at a higher rate.
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