Withholding and Paying Employee Federal Income Tax

Your 501(c)(3) generally must withhold and pay Federal income tax from its employees’ wages.

To figure out how much Federal income tax to withhold, employers should ask employees to complete Form W-4, Employee’s Withholding Allowance Certificate. Ask each new employee to complete and sign a W-4 by his or her first day of work. Keep the form on file, and send a copy to the IRS if the IRS directs you to do so in a written notice.

If a new employee fails to provide a completed Form W-4, your 501(c)(3) should assume single status with no withholding allowances.