Essential Employment Documentation and Tax Forms Study Guide

Essential Employment Documentation Overview

  • Employers are legally responsible for obtaining specific information and documentation from new hires to ensure compliance with United States regulations.
  • These documents serve two primary functions:
    • Proof of identity to verify the individual is who they claim to be.
    • Proof of legal authorization to work in the United States.
    • Facilitation of employment tax reporting and withholding.

Form I-99: Employment Eligibility Verification

  • Purpose: The I-99 form is a critical component of the onboarding process used to confirm an employee's identity and their legal eligibility to work within the United States.
  • Completion Timeline: The form must be completed when an individual starts a new job.
The Three-Step Process for I-99 Completion
  1. Step 1 (Employee Action): The employee must fill out Section 11 of the I-99 form.
  2. Step 2 (Documentation Selection and Presentation): The employee selects documents from the official list (found on Page 22) and presents their documentation along with the partially completed form to the employer.
  3. Step 3 (Employer Action): The employer reviews the physical documents provided by the employee and completes Section 22 of the I-99 form to certify verification.
Document Lists and Requirements

Page 22 of Form I-99 contains three distinct lists (List A, List B, and List C). Employees have two specific options for providing documentation:

  • Option 1: Selection from List A: The employee provides one document that establishes both identity and employment authorization. Examples include:
    • U.S. Passport.
    • Permanent Resident Card.
    • Foreign passport containing correct authorizations.
  • Option 2: Selection from List B AND List C: If the employee does not provide a document from List A, they must provide one document from List B for identity AND one document from List C for employment authorization.
    • List B (Identity Only):
    • U.S. or Canada driver's license.
    • ID issued by U.S. federal, state, or local governments.
    • School identification card (ID).
    • U.S. Military identification.
    • School records.
    • List C (Employment Authorization Only):
    • Social Security (SS) card.
    • U.S. Birth Certificate.
    • Native American tribal documents.
    • U.S. Citizen ID card.

Form W-44: Employee's Withholding Certificate

  • Purpose: Form W-44 informs the employer how much federal income tax to withhold from the employee's pay.
  • Impact: The information provided affects whether the employee will owe taxes at the end of the year or receive a tax refund.
  • Variables: Withholding is determined based on:
    • Filing status.
    • Number of dependents.
    • Other financial factors (e.g., additional income).
  • Maintenance: Employees do not need to file a new W-44 every year. However, they are advised to review their withholding annually or after major life changes, such as:
    • Marriage or divorce.
    • Gaining new dependents.
    • A child no longer qualifying as a dependent.
    • New sources of additional income.
The Five-Step Process for W-44 Completion
  • Step 1: Provide personal details.
  • Step 2: Account for multiple jobs or a spouse who works.
  • Step 3: Claim dependents and other tax credits.
  • Step 4: (Optional) Other adjustments (extra withholding or deductions).
  • Step 5: Signature and date.

Questions & Discussion

Identification and Eligibility Scenarios
  • Teresa and Sean Case Study: Teresa and Sean were hired by a delivery company and must provide proof of identification and eligibility.
    • Teresa provides an alien resident card (This typically falls under List A).
    • Sean provides a certification of birth abroad and a U.S. citizenship card.
    • Status: Both employees are analyzed to see if they meet the requirements for I-99 compliance.
Withholding Calculations and Adjustments
  • Jamal at Bronx Sports: Jamal, a new hire, has completed their W-44 and provided it to the hiring manager. The employer uses this to confirm authorization and tax obligations.
  • Ray's Step 4, Line C Adjustment: Ray wrote 4040 in Step 44, Line C of the W-44 form.
    • Implication: This means an additional 4040 needs to be withheld from Ray's federal tax per pay period. It is an addition to the standard withholding, not the total amount to be withheld.
Claiming Tax Exemption
  • Joe's Claim for Exemption: Joe, a new employee at Planned Systems, wants to claim as "Exempt" from federal income tax withholding on his W-44.
  • Qualifications: Certain specific legal qualifications must be met before Joe can legitimately claim exemption from taxes, such as having had no tax liability in the previous year and expecting none in the current year.