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Special Report

Your Paycheck… Payroll Taxes and Employment Laws Can Cost you Money!!! Part 1: When you get a Job

 Getting Started: Your Social Security Number

It’s a good idea to bring your Social Security card with you on your first day of work. You will need your Social Security number to complete several forms, and your employer may ask to make a copy of your card. Your Social Security number is a nine-digit number, grouped and hyphenated like this: 123-45-6789.

What is so important about my Social Security Number?

When you are assigned Social Security number, an account is set up with the Social Security Administration. Each year, wages are recorded in your account. When you retire, or if you become disabled, your Social Security benefits will be based on your total earnings reported.

The Internal Revenue Service and your employer will use your Social Security number as your personal ID number when your wages and taxes are reported.  Your Social Security number is also printed on your tax return.

How do I get a Social Security Number?

If for some reason you do not have a Social Security number, fill out Form SS-5 Application for Social Security Card; and, submit it to the Social Security Administration along with any required documents.

If my name changes, Do I need a NEW Social Security card?

Yes; if your name changes due to Marriage, Divorce, or some kind of legal action, you must obtain a New Social Security card and show it to your employer.

  1. Complete Form SS-5 Application for a Social Security Card to file your name change with the Social Security Administration.
  2. When your receive your new card in the mail, take it into your employer and have your name changed on the payroll records. (Tip: If your employer changes your name before you receive your new card, someone may make a mistake in reporting wages to your Social Security account. The possible result: your might receive less money than you should when you retire or become disabled.)
  3. Destroy your old Social Security Card.

Another reason for getting a new Social Security card when you change your name. If you are married and file a joint tax return with your spouse, the Internal Revenue Service will reject the joint return if the Names and Social Security numbers on the return DO NOT match the Social Security Administration’s records.

Proving your RIGHT to work: US Citizenship and Immigration Services Form I-9, Employment Eligibility Verification

Federal law requires ALL employers to make sure they don’t accidentally hire illegal aliens. Upon employment, you have to prove your identity and right to work in the United States. Employers will check your documentation to make sure it’s genuine and to be certain that you’re legally allowed to work. Regardless of your nationality, your employer should review your documents within your first Three (3) days of work.

How can I prove my identity and right to work in the United States?

This is easy! On your first day of work, you will need to complete the employee portion in Section 1 of the Form I-9. Your employer will complete the rest of the form. This is where you’re going to need your documentation. Lists A, B, and C on Form I-9 outline acceptable forms of identification to prove you are legally allowed to work in this country. You should show your employer either one document from LIST A, or One  document from both LIST B and LIST C. The documents must be originals, no copies, except for a certified copy of a birth certificate.  (Quick Tip: Many employee’s use their Social Security card together with their driver’s license to prove their right to work.)

Know you RIGHTS…

Identity theft and Identity Fraud: Identity theft is one of the fastest growing crimes in the U.S. It occurs when someone uses information that uniquely identifies you. Such as, your Social Security number-without your permission to commit fraud. It can create personal problems, such as being charged for unauthorized phone calls, purchases mae on your credit card, or poor credit report that keeps you from obtaining a loan for a car or home.

One of the best ways to protect yourself against identity theft is to store your Social Security card in a safe place after you have shown it to your employer. Your employer should also make sure that your Social Security number is only shared with those who need to know it, and that records with your number on them are properly destroyed when no longer needed.

Its your choice: When you present proof of your identity and right to work to your new employer, it is within their legal right to make photocopies for their records. However, employers cannot tell you which specific documents to present. It’s your choice: as long as they appear genuine and are on Form I-9’s list of acceptable documents. Your new employer must accept them as proof.

Paying your fair share: 

Form W-4 Employee’s Withholding Allowance Certificate:

Form W-4 , Employee’s Withholding Allowance Certificate, must be submitted either on or before the first day of work. The information on the W-4 will be used to calculate how much money will be withheld in federal income tax from your paycheck.

Submit this form to your employer right away. If you put it off, your employer will withhold the maximum amount of tax from your paycheck! In addition, if your living situation changes, you may need to file a new W-4.

What is the purpose of this form?

Form W-4 notifies your employer how much Federal Income tax to deduct from each paycheck. The amount withheld is based on your Marital Status (Married or Single), and on the number of withholding allowance your claim. If you want an extra specific dollar amount take out of your paycheck, you can write that in on this form. Form W-4 is also used to claim a  total exemption from Federal Income tax withholding.

What are withholding allowances?

The more withholding allowances you can claim, the less withheld in federal income tax each pay period. This is why submitting your W-4 is so important! Until you turn this form in, your employer has to assume that you are Single and Claiming zero allowances. You are likely to pay more tax than is necessary. Although you will receive a tax refund for the extra tax when you file your personal income tax return, there is no good reason to give the federal government an interest-free loan of your hard-earned money.

Conditions for Claiming Withholding Allowance: 

Did you know? You can claim an allowance for:

  • Yourself… Unless, someone else (a spouse or parent) will list you as a dependent on their income tax return.
  • Your Spouse… Unless, your spouse is working and has already claimed an allowance on their W-4.
  • Each child you list as a dependent on your tax return… Unless, your spouse has already claimed each child on their W-4.

You can use the W-4 Personal Allowances Worksheet to calculate additional allowances. These allowances are based on deductions for interest on your home mortgage, contributions you made to charities, state and local taxes, some medical expenses, and various other deductions you might have taken, see Form W-4 for details.  

 To determine total allowances, use the worksheet of Form W-4 (the information above is repeated there.)Do Not ask your employer how many allowances your should claim. If you need help:

  1. Get a copy of the Internal Revenue Services Publication 505, Tax Withholding and Estimated tax, from your employer.
  2. Call the IRS at 800-TAX-FORM (829-3676)
  3. Download a W-4 from the IRS website.

You can also calculate what your income tax withholding and take-home pay will be by going to the National Payroll Week website and plugging in your W-4 information.

You should provide your employer with only the bottom portion of Page 1 of your W-4. Cut the form were indicated and keep the top portion for your own records. The top portion explains how you determine the number of withholding allowances. Cut the form were indicated and keep the top portion for you own records. The top portion explains how you determined the number of withholding allowances.

Attention Non-Residents!

If you’re a non-resident aliens that is, if you are here from another country (ie: Japan) and you do not have a Green Card- You can ONLY claim One (1) withholding allowance. This holds true unless you come from Canada, Mexico, or the Republic of Korea. In this case, you may claim as many allowances as apply to you. All nonresident aliens must also write “NRA” or Nonresident Alien” above the dotted line on Line 6 of Form W-4 because of special withholding rules for nonresident aliens.

Can you Claim to be Exempt from Federal Income Tax Withholding?

Is it possible for you to have NO Federal Income Tax Withholding at all? It is possible that you qualify, but not very likely. You can claim to be exempt from Federal Withholding only if both of the following conditions apply:

  1. You ended up owing NO Federal Income Tax Last Year, and all the Federal tax withheld from you during the year was given back after you filed your return. and;
  2. You don’t expect to owe any federal income tax for the current year.

You have to renew your claim to an exemption each year by February 15. If you don’t you employer will start withholding federal tax from your paychecks as if you were single and had zero withholding allowances, unless there is a W-4 in your personnel file that doesn’t claim a total exemption from withholding. Submit a new W-4 to your employer to renew your claim.

Almost no one is exempt from Social Security or Medicare tax. A claim of exempt status won’t affect your Social Security or Medicare Tax withholding.

When Do I Have to Submit a New W-4?

If either of the Two situations below applies to you, you have 10 days to fill out and submit a New W-4 to your employer.

  1. Your living arrangement or financial situation changes, resulting in fewer withholding allowances. (IE: If you get a divorce, or a previously non-working spouse takes a job, or a dependent moves out of the house, your are required to submit a new W-4 showing the reduced number of allowances).
  2. You realize that you are no longer exempt from federal income tax withholding because you’re going to have to pay income tax in the current year; you are require to submit a new W-4 showing you do not claim exempt.

You can file a new W-4 if either of the Two (2) examples below applies to you, but you don’t have to. However, you really should though, because if you do you’ll have more take home pay!

  1. Your living arrangement or financial situation changes, resulting in more withholding allowances. (IE: If you or your spouse gives birth to a child, or if a working spouse quits their job, you can claim an extra allowance. You can turn in a new W-4 reflecting this change at any time.)
  2. You realize that you are now exempt from Federal Income Tax Withholding. You can turn in a new W-4 reflecting this change at any time.

If your Name Changes, you should submit a new W-4 to your employer, but only after you have received your new Social Security card.

You are not allowed to make changes to your W-4 in advance. Suppose, for instance, that you’re planning to get married. You have to wait until after the wedding to submit a new form with your update marital status.

Your employer also has responsibilities with regard to the W-4. By December 1 of each year, your employer should remind you to turn in a NEW form for the next year if your Marital Status or Number of Allowances has Changed. You employer is also required to start using any New W-4 you turn in within a month of receiving it from you.

What If My Employer Rejects My W-4?

It is your responsibility to submit accurate information on your W-4. Your employer will not review it for you. If you W-4 has obvious problems, though, your employer won’t accept it.

Any one of the following faults will cause your W-4 to be rejected:

  • Changing the Text of the Form, either by crossing out parts of it or adding statements to it.
  • Using the form to request that a Flat Dollar amount of tax or a Certain percentage of your wages be withheld– This is illegal! Federal Income Tax is calculated on the basis of your Withholding Allowances and Marital Status.
  • Telling your employer some the information on the form is false. If you submit an unacceptable W-4, you should complete a new one. If you don’t, and you are a New Employee, your employer will have to assume that you are Single and have Zero Withholding Allowances. If you are not a New Employee, your employer will keep using your most recent W-4 on file. Either way, you could easily end up paying more in taxes than you have to!


Definition of “No Federal Income Tax Liability” You had NO Federal Income Tax Liability for a year only if ALL the Federal Income Tax withheld from your pay was refunded to you.

You’re Not Quite There Yet!Even if this definition applies to you, you still may not be exempt from Federal Income Tax Withholding. You are NOT exempt if:

  • You’re income for the year is more than $950 and includes over $300 of unearned income. (IE: Interest and Dividends), and;
  • Someone else is claiming you as a dependent.

Students Are Not Automatically Exempt! High school and College students have to meet the conditions above to claim an exemption.

Don’t Commit a Felony! It is a felony offense to make false claims on your W-4 in the hope of reducing your Federal Income Taxes. If you’re found guilty of it, the punishment can be severe.

State Employee Withholding Allowance Certificates

Forty-one (41) States have State Income Taxes. These taxes, like Federal Income Tax, are withheld directly from employee’s paychecks. If you live in one of these states, you might have to fill out yet another form: a State Withholding Allowance Certificate. If you are lucky, your State will let your employer use the Federal Form W-4 to calculate State Income Tax Withholding. Otherwise, your employer will supply you with the State form to fill out. Some counties, cities, and school districts also withhold income tax. Residents of these areas may have to fill out separate forms for these local taxes too.

The states that DO NOT have an Income Tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. You can check the IRS website at any time for the most current list of States Without a State Income Tax.


About hawaiipayrollservices

Founded in 2003 under the premise to provide Hawaii Businesses with better Advice, better Service, better Value... for an Easier life and Peace of Mind! We understand payroll is the largest expense and biggest challeng for any business. Whether you're hiring your 1st employee, or you employee thousands. Simplify your payroll processing, payroll funds disbursement; let our knowledgeable staff with 20 years experience work for your company, while saving 15-30% on your overall payroll processing expense.


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Hawaii Payroll Services

June 2012
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