Your W-4, officially called the Employee’s Withholding Certificate, is an IRS form that tells your employer and Alpaca (as the payroll service provider) how much federal income tax to withhold from each paycheck. The details you enter here affect whether you get a refund or owe money when you file your taxes each year.
Previously, W-4s included “withholding allowances” to reduce the amount of tax taken out of your pay. That changed with the 2017 Tax Cuts and Jobs Act, which removed personal exemptions. Since 2020, the redesigned W-4 asks for basic personal info, dependents, and adjustments instead of allowances.
The IRS updates tax forms every year, including the W-4. You can always grab the latest version directly from the IRS website, but if you’re with Alpaca, you’ll complete it right inside our system. That way, your tax info flows directly into payroll.
Taxes aren’t as simple as looking at your salary and applying a flat rate. Your W-4 helps Alpaca’s payroll team calculate withholding correctly by asking about things like:
That’s why we ask you to fill it out as soon as you start working with us — it ensures your withholdings match your actual tax situation.
Not necessarily. If your information hasn’t changed, your W-4 in Alpaca stays valid. But major life events (marriage, divorce, new dependents, a side gig, or big income changes) might require an update.
If you owed a large bill last year, you may want to increase your withholdings. If you got a big refund, you might want to adjust so more money stays in your paycheck throughout the year.
Here’s a step-by-step guide to completing your form:
Step 1: Personal info
Enter your name, address, Social Security number, and filing status. Your status matters for which credits and deductions you qualify for.
Step 2: Multiple jobs or spouse works