Are you making sure your employees are filling out their IL-W4s and keeping them updated? The IL-W4 is Illinois’ state withholding form, and it ensures that the correct amount of Illinois state income tax is withheld from the employee’s pay. Let’s take a look at what’s on the IL-W-4 form and how to fill it out in order to maintain your payroll compliance.
Know the Purpose of the IL-W-4 Form
The IL-W-4 form needs to be filled out on or before the first day of work. The form helps ensure that the correct amount of taxes is withheld on the employee’s paychecks so that they do not owe the state of Illinois at the end of the year. On the form, your employees will claim allowances that are based on their personal or financial situations.
Example:
unless the employee can be claimed on someone else’s taxes, they’ll receive one allowance for themselves on your IL-W4. If the employee is married and/or has children, they’ll be able to claim additional allowances for their spouse and/or children. The directions for the IL-W-4 form will explain allowances and help your employees calculate the correct number.
Understand the Information Required on the Form
The IL-W-4 form is fairly straightforward. The employee must enter their name, social security number, street address, city, state, and zip code. They must also indicate the number of allowances they want to claim or are legally allowed to claim. For most employees, their allowances are going to be themselves, their spouse, and any children. However, there are also allowances for individuals over the age of 65, spouses who are over the age of 65, and if the employee and/or their spouse is legally blind.
Know How to Calculate Withholding Allowances
In order to fill out the IL-W-4 form, the employee must calculate their basic personal allowances (Step 1) and some additional allowances (Step 2) if they are eligible. The first step asks the employee if they can be claimed as a dependent and if their spouse is their dependent. These are checkboxes. Then, they’ll enter a number that indicates how many boxes they checked on line 1.
For example, If they checked both boxes, they’d input a “2” on line 1. If the employee has any additional dependents, like children, they would indicate that number on line 2. Line 3 involves adding lines 1 and 2.
For example, if the employee wrote a “2” on line 1 and wrote a “3” on line 2, they would enter “5” on line 3.
Line 4 is the total number of allowances the employee would like to claim. This number can range from 0 to the number indicated on line 3.
For example, if the employee can claim up to 5 allowances but would like more taxes withheld from their check, they can claim fewer than the number indicated on line 3. This can happen if the employee has a second job or they participate in gig work that doesn’t subtract any taxes from their pay so that they do not owe as much at the end of the year.
The second step on the IL-W-4 form involves calculating any additional allowances. These are for individuals who are 65 or older, or their spouse is 65 or older, are legally blind, or have a spouse that is legally blind. Once those are checked or not, the employee will enter the number of allowances they claimed on line 5.
For example, if the spouse’s husband or wife is legally blind and they’re both over the age of 65, the employee could claim an additional three allowances.
Line 6 allows the employee to carry down the number of allowances they claimed on line 4 in the first section and add any additional allowances from the current section. Then, they will divide line 6 by 1000 and enter the result in line 7.
For line 8, the employee will be asked to add lines 5 and 7 and enter the result. This is the total number of Illinois deductions that the employee can claim. Line 9 carries down the allowances from line 2 and asks the employee to enter them. Though, the employee can claim from 0 to the maximum number of allowances in line 8.
It’s very important that your employees understand the benefits and drawbacks of claiming their allowances. After all, if they claim too many, their checks may not have enough Illinois taxes taken out, and if they claim too few, they may be unintentionally making their net pay less than what it could be.
Stay Up-to-Date With Changes
It’s important to note that the state of Illinois may update or change the IL-W4 at any time, and it’s the employer’s responsibility to state up-to-date on those changes. Additionally, employees may need to update their IL-W-4 form if their life circumstances change. For example, if the employee gets married, they may wish to claim their spouse as a dependent. Likewise, if the employee has children, they may wish to add those dependents to their IL-W-4 form.
Getting Help With Payroll Compliance From ASAP Payroll
If you’re worried about your payroll compliance and want to make sure your HR management team has the correct tools at their disposal, consider using ASAP Payroll’s payroll software and HR management tools. Our payroll software can help ensure that all of your employee’s new hire and payroll forms, including the IL-W-4 form, are filled out in a timely manner.
Our HR software can help you track your applicants, onboard your new employees and create and implement your benefits plans. Your employees will even get access to a self-service portal where they can manage all of their benefits and update their state and federal tax forms as needed.
To learn more about our payroll and HR software solutions and to get started on the process of using our HR solutions, request a quote today.
