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A W-4 Form with No Social Security Number & Other Payroll Pitfalls to Avoid

An HR representative processing an employee's Form W-4

Do you know what to do if your new hire fills out a W-4 form with no Social Security number or there’s a mistake on one of the forms needed for payroll? 

If you don’t know what to do next, don’t panic. Canal HR has helpful solutions to common payroll pitfalls like this one. 

As an employer, it is your responsibility to collect all of the necessary paperwork from your new employees in order for your payroll to operate properly. The payroll process is made up of many moving parts that require immense attention to detail. Overlooking even the smallest detail can cause substantial problems for your payroll system and company. 

The process can be challenging, but here are the most common payroll pitfalls and how to efficiently avoid them. 

Filing a W-4 Form with No Social Security Number

When you hire a new employee, the W-4 Form is one of the two federally mandated forms needed for payroll that they must fill out upon hire. 

The W-4 Form, or Employee’s Withholding Certificate, determines the amount of federal income taxes that will be withheld from an employee’s annual wages. Basic personal information on the W-4 Form include the employee’s name, address, marital status, and Social Security number. 

State and federal W-4 forms exist, but many states only require the federal form. However, employees must include their SSN on the state W-4 form. 

So, can you hire an employee with no Social Security number? It is virtually impossible to work in the United States without one. Employers are required to provide the IRS with an employee’s Social Security number in order to record their wages and fulfill the forms needed for payroll. 

You can, in fact, hire an employee that does not have a Social Security number by following these steps: 

  1. Instruct the employee to fill out Form SS-5 with the required materials. 
  2. Collect a statement from the Social Security Administration expressing the employee’s submission of Form SS-5, along with the approval for current work with your company. 
  3. Authorize the employee’s employment.
  4. Verify the employee’s Social Security card after it is received. 
  5. Make a copy of the employee’s Social Security card and other forms of identification, if necessary. 
  6. Get the employee to complete an I-9 form. 
  7. Complete the remaining forms needed for payroll and human resource requirements. 

The potential employee can complete the W-4 form with no Social Security number, but they have to apply for a SSN by filling out Form SS-5, Application for Social Security Card. Once the form is filled out and submitted, you can allow the employee to begin working. However, you must file and record the appropriate forms needed for payroll, therefore, the employee must present a SSN to you in a fair amount of time.

If your employee is denied a Social Security number, the IRS prohibits you from employing them further. 

Establishing Payroll Records

The payroll record serves as an information source for all other forms needed for payroll, such as the W-2 Wage and Tax Statement. So it’s critical that essential details, such as the new employee’s name, Social Security number, and withholding allowances, are entered accurately. 

Always have another human resources consultant or payroll clerk examine the documents for the pertinent information. Verifying the accuracy twice on the forms needed for payroll provides little room for potential errors to occur within your company’s payroll system. 

Originally, Form W-4 was used to establish federal income tax withholding, but the form is often used to establish a payroll record. The W-4 remains valid until replaced by the employee, but there is one exception—a W-4 requesting exemption from withholding needs to be renewed each year.

Make sure to remind all of your employees to update their W-4 and other forms needed for payroll annually to ensure the functionality of your payroll records. 

Solutions to Filing Forms Needed for Payroll

It is critical for employers to be cautious and aware of the intricate details of the forms needed to efficiently run and manage their payroll. 

Lucky for you, we can provide some suggestions to help you avoid making these significant payroll mistakes. 

Communicate with Employees

Active communication with employees can avoid incomplete, altered, unsigned or otherwise invalid W-4s. Invalid forms are treated the same as no form at all: “single” with “0” allowances.

Remember that invalid W-4s differ from “questionable” W-4s. Invalid forms contain more than 10 withholding allowances or claim exemption from withholding where wages are normally more than $200 per week. 

A questionable W-4 is filed with the IRS along with Form 941, Employer’s Quarterly Federal Tax Return. 

Either situation most likely results from misunderstanding and can be resolved with better communication. Although employers can’t serve as tax consultants, they can alert employees to the new withholding calculator on the IRS website, which guides employees to generate a more accurate W-4 form. 

For non-residents who perform services in the United States, special W-4 rules and regulations apply. Employers with global staff should read IRS Publication 15 (Circular E) to learn how to effectively communicate with employees regarding their federal form requirements. 

Verify W-4 Information 

Thoroughly check the information you provide to the Social Security Administration (SSA) to prevent receiving “mismatch” or “v” letters from the administration. 

In order to avoid issues with the SSA, employers may keep a copy of their staff’s Social Security cards on file, but they cannot make it an employment requirement. When the employee fills out the W-4 form, employers can verify that the name and number on the form match the information on file and on the original Social Security card. 

Employers can call the SSA to further verify employee’s Social Security information by calling (800) 772-6270. 

Up to five names and numbers can be verified by phone per call, while up to 50 names and numbers can be verified through the local Social Security Administration office. Through the Social Security Administration Employer Verification Service, up to 250,000 names and numbers can be verified. 

Make Annual Changes to Forms Needed for Payroll 

At year-end, remind and ask employees to audit forms on file that are required for payroll. Be certain that their current names and Social Security numbers match the information you have on file. 

In the event that an employee has changed their name, ensure that they have notified the SSA of the change and the official change has been made. If an employee has yet to tell the federal administration, advise them to do so promptly.

Best Name Practices

When filing the necessary payroll forms, avoid using the employee’s first initials in place of their names. Also avoid incorporating nicknames or titles, such as Dr., Ph.D., and Esq. 

Previously, employees who kept their maiden name when they were married were required to use a hyphen to separate the two last names. Instead, compound names can now be separated by a blank space.

As mentioned earlier, employers should utilize double-verification of their forms on file. The Social Security Administration Employer Verification Service allows employers to check accuracy where there are multiple last names. 

Follow the most current Social Security Administration instructions on filing W-2 name fields and model your payroll record to adopt the practices accordingly.

Best Social Security Number Practices

Employers should note that Social Security numbers do not begin with the number 8 or 9 and cannot be all the same number or sequential numbers. A number beginning with the number 9 may be an Individual Taxpayer Identification Number issued to a nonresident without a work permit.

Ask new hires who fill out a W-4 form with no Social Security number to get one as soon as possible. Make sure that you ask for physical and original proof that they have applied. If you need to file before the Social Security number is obtained, entering all zeros in MMREF (Magnetic Media Reporting and Electronic Filing) electronic or magnetic W-2 filings will be accepted. Enter the statement “applied for” on paper W-2s.

When the employee’s Social Security number becomes available, immediately file a W-2 correction to ensure that wages are posted to the earnings history. 

To avoid other legal problems, employees who perform services must be paid, even if there is no Social Security number. Establish a mechanism for payment and also set up an edit program to trigger a follow-up.

Let Canal HR Help You Avoid Filing a W-4 Form with No Social Security Number

With Canal HR, you can face the challenges that come with forms needed for payroll head on. Outsourcing your payroll preparation and administration to the highly experienced human resource professionals at Canal HR helps you streamline your company’s payroll processes. 

Since 2013, we have served hundreds of businesses, helping them create an effortless payroll record system with our valuable expertise. Canal HR boasts a customer service team known for providing noteworthy assistance to clients and their human resources department. 

If you believe you’re susceptible to making any of the common payroll mistakes mentioned or believe that Canal HR has what it takes to effortlessly align with your business, contact us to schedule a free consultation today.