How to Fill Out IRS Form W-4S (w/Examples) + FAQs

Yes, you can ask a third-party insurer to withhold federal income tax from your sick pay by giving them a completed IRS Form W-4S. This short, one-page form tells the insurance company exactly how many whole dollars to pull from each weekly sick pay check and send to the IRS on your behalf. Without it, most third-party sick pay arrives with no federal income tax withheld, which can leave you with a painful tax bill and an underpayment penalty in April.

Roughly 30% of private-industry workers have access to short-term disability insurance through their employer, and many discover too late that those benefits are taxable when paid by a third party. Filing W-4S protects you from that surprise.

Here is what you will learn in this guide:

📋 The exact line-by-line method to complete Form W-4S without errors
💵 How to calculate the right whole-dollar withholding using the official worksheet
⚖️ The federal rules under IRC §3402(o) that make this withholding voluntary
🧾 Three real scenarios showing how withholding choices change your refund or balance due
🚫 The seven most common mistakes filers make and how to dodge each one

Pre-Draft Outline (Word Count Targets)

H2: What Is IRS Form W-4S? — 380
H2: Who Should File Form W-4S — 340
H2: Federal Law Behind W-4S Withholding — 360
H2: Line-by-Line: How to Fill Out Form W-4S — 720
H3: Personal Information Lines — 150
H3: Line 1 – Whole Dollar Withholding Amount — 160
H3: Worksheet Lines 1-8 — 220
H3: Signature, Date, and Submission — 150
H2: Three Real Scenarios With Tables — 520
H2: Named Examples That Bring W-4S to Life — 360
H2: W-4S vs. W-4, W-4P, and W-4V — 340
H2: Mistakes to Avoid on Form W-4S — 420
H2: State Income Tax Nuances on Sick Pay — 320
H2: Do’s and Don’ts of Form W-4S — 320
H2: Pros and Cons of Filing W-4S — 320
H2: Court Rulings and IRS Guidance Worth Knowing — 320
H2: FAQs — 600

Target total: ~5,320 words.

What Is IRS Form W-4S?

Form W-4S, Request for Federal Income Tax Withholding From Sick Pay, is the IRS document you give to a third-party payer of sick pay so that federal income tax is taken out of every sick pay check you receive. The form is short and asks for one critical number: the whole-dollar amount you want withheld from each payment.

Sick pay means wage replacement you receive while you are unable to work because of illness or injury. When that money comes from your own employer, normal Form W-4 withholding usually applies. When it comes from a separate insurance company, like Aflac, Unum, or The Hartford, that insurer is a third-party payer and federal withholding only happens if you ask for it on W-4S.

The plain-English idea is simple: the IRS wants you to pay tax as you earn the income, not in one lump sum next April. Sick pay from a third party is treated as taxable wages under IRC §105(a) when premiums were paid by your employer with pre-tax dollars. If you skip W-4S, no income tax leaves the check, and you owe everything at filing.

The consequence of ignoring this form is real. You can face an underpayment penalty under IRC §6654 if you do not pay enough tax during the year through withholding or estimated payments. The penalty rate floats with the federal short-term rate plus three points, so the longer you wait, the more it stings.

A common misconception is that disability benefits are always tax-free. That is only true when you paid the premiums yourself with after-tax dollars, which the IRS explains in detail inside Publication 525. Employer-paid premiums almost always make the benefits taxable.

Who Should File Form W-4S

You should file W-4S if you receive sick pay from a third-party insurer and you expect that sick pay to be taxable on your federal return. The form is voluntary, but waiving withholding is rarely smart when the benefits are taxable.

The IRS lists eligible recipients inside the W-4S instructions: employees temporarily out of work due to non-job-related sickness or injury, who receive payments from an insurance company, trust, or other third party that is not the employer. Workers’ compensation, paid under a state statute, is not considered sick pay and is generally tax-free under IRC §104(a)(1).

You should not file W-4S if your sick pay comes directly from your employer, because the regular Form W-4 already governs that withholding. You also do not need it if your benefits are fully tax-free because you paid 100% of the premiums with after-tax dollars.

The consequence of misjudging eligibility is awkward. If you submit W-4S to your employer instead of the third-party insurer, the form does nothing. Sick pay keeps coming with no extra tax pulled, and you may also owe state estimated taxes on top.

A common misconception is that Social Security Disability Insurance (SSDI) recipients can use W-4S. They cannot. SSDI beneficiaries instead use Form W-4V to set a flat withholding rate of 7%, 10%, 12%, or 22%.

Federal Law Behind W-4S Withholding

The legal foundation for W-4S sits in IRC §3402(o), which lets recipients of certain payments, including third-party sick pay, voluntarily request federal income tax withholding. Treasury implements this through Treasury Regulation §31.3402(o)-3, which spells out the request, the minimum amount, and how to revoke it.

The plain-English rule is that a third-party payer is not required to withhold income tax on sick pay unless you, the payee, give a signed W-4S. Once you submit it, the insurer must follow your instructions starting with the first payment made on or after the eighth day from receipt, unless they choose to begin sooner.

The minimum withholding amount is $20 per weekly payment, set by the regulation and printed on the form itself. Anything below $20 is rejected, and the insurer keeps withholding nothing. The maximum is your full payment minus the FICA tax, any other mandatory deductions, and any after-tax contribution to insurance you make.

The consequence of ignoring §3402(o) shows up at tax time. If your total federal payments fall under the safe harbor in §6654(d), meaning you paid less than 90% of the current year’s tax or 100% of last year’s (110% for higher earners), the underpayment penalty applies.

A common misconception is that the insurance company can refuse to withhold. They cannot, as long as the form is valid and the requested amount meets the $20 minimum. Refusal violates Treasury rules and can expose the insurer to penalties under IRC §6672.

Line-by-Line: How to Fill Out Form W-4S

The form fits on one page and divides into three pieces: your personal information, the dollar amount on Line 1, and the worksheet that helps you choose that amount. Walk through each in order, and the math becomes manageable. The official copy is hosted at IRS.gov/FormW4S.

Personal Information Lines

At the top, print your full legal name on the line marked “Type or print your first name and middle initial” and “Last name.” Use the name that matches your Social Security card to avoid mismatch notices later. Right of that, write your nine-digit Social Security number with no dashes, exactly as it appears on your card.

Below the name, fill in your home address, including apartment or suite number, then your city, state, and ZIP code. The insurer uses this address to mail your year-end Form W-2 reporting the sick pay and the tax withheld.

The consequence of an SSN typo is a mismatch with the IRS database, which can delay your refund. Double-check every digit before signing.

Line 1 – Whole Dollar Withholding Amount

Line 1 asks for the dollar amount of federal income tax you want withheld from each sick pay payment. The amount must be in whole dollars (no cents), at least $20, and cannot exceed the payment minus required deductions.

Round up rather than down when in doubt. If the worksheet says $47.30, write $48. The extra few dollars per check act as a small buffer against the §6654 penalty.

The consequence of writing a number under $20 is rejection of the entire request, leaving you with zero withholding. The consequence of writing too much is a smaller weekly check, but you recover any overpayment through your refund.

Worksheet Lines 1-8

The worksheet on page 2 of the form helps you size Line 1 correctly. It walks through eight quick lines that mirror a mini Form 1040 projection.

Worksheet Line 1: estimate your total taxable income for the year, including wages, sick pay, interest, and self-employment.
Worksheet Line 2: enter the standard deduction. For 2025, that figure is $15,000 single, $30,000 married filing jointly, $22,500 head of household, per the 2025 inflation adjustments.
Worksheet Line 3: subtract Line 2 from Line 1 to get taxable income.
Worksheet Line 4: compute the tax using the 2025 tax tables.
Worksheet Line 5: subtract any expected tax credits, like the Child Tax Credit or earned income credit.
Worksheet Line 6: subtract tax already withheld or paid through estimated payments year-to-date.
Worksheet Line 7: subtract any tax expected from other sources between now and year-end.
Worksheet Line 8: divide the remainder by the number of sick pay weeks left, then round up. That whole-dollar number goes on Line 1 of the form itself.

Signature, Date, and Submission

Sign the form by hand at the bottom and date it the same day you sign. An unsigned W-4S is invalid, and the insurer must ignore it.

Submit the completed form to the third-party payer, not to the IRS and not to your employer. The insurer keeps it on file and starts withholding within eight days. Keep a photocopy for your own records in case you need to revoke or amend.

The consequence of missing the signature is total inaction. The check still arrives with no income tax withheld, and the clock keeps ticking on any estimated tax shortfall.

Three Real Scenarios With Tables

Real numbers make the form click. Each scenario below shows a different filer and how their Line 1 choice plays out at tax time.

Scenario 1: Maria, single, $46,000 sick pay over 26 weeks

Withholding Choice	Tax-Day Outcome
$0 per week (no W-4S)	Owes ~$3,400 plus an estimated §6654 penalty of about $130
$130 per week ($3,380 total)	Refund of about $20, no penalty risk
$200 per week ($5,200 total)	Refund of about $1,840, gives up cash flow during illness

Scenario 2: James and Linda, married filing jointly, James receives $30,000 sick pay over 15 weeks while Linda earns $90,000 in wages

Withholding Plan	Year-End Result
No W-4S filed	Joint return owes ~$3,600, pushed into the 22% bracket
$240 per week on James’s W-4S	Balance owed near $0 after Linda’s W-2 withholding
$400 per week on James’s W-4S	Refund of about $2,400, but James’s checks shrink during disability

Scenario 3: Aiden, head of household, $18,000 short-term disability over 12 weeks, no other income

Approach	Federal Income Tax Owed
No withholding	Around $0 owed because of the $22,500 HOH standard deduction, W-4S not necessary
$20 minimum weekly withholding	Refund of $240, but lost use of money during recovery
$50 weekly withholding	Refund of $600, even larger cash-flow hit

The lesson is that withholding should match expected tax liability, not maximize a refund. Aiden’s case shows that low total income can make W-4S unnecessary, while Maria and James benefit from precise withholding.

Named Examples That Bring W-4S to Life

Example 1: Priya the software engineer. Priya, single, earns $120,000 a year and breaks her ankle. Her employer’s third-party insurer pays her $1,200 a week for ten weeks. Priya files W-4S with $230 on Line 1, matching her usual 22% marginal bracket as listed in the 2025 IRS bracket tables, and lands within $50 of break-even at filing.

Example 2: Carlos the warehouse supervisor. Carlos files jointly and earns $58,000. After surgery, he receives $700 weekly sick pay for 20 weeks. He picks $70 weekly on W-4S based on the worksheet’s projection, neutralizing the extra $14,000 of taxable sick pay without overshooting.

Example 3: Denise the freelance graphic designer. Denise has self-employment income and short-term disability through a private policy whose premiums she paid with after-tax dollars. Because the benefits are tax-free under IRC §104(a)(3), she does not file W-4S. She still files quarterly Form 1040-ES on her freelance income.

These three filers show why the form is fact-specific. The deciding variables are filing status, total household income, premium-payment history, and benefit duration.

W-4S vs. W-4, W-4P, and W-4V

Each “W-4 family” form serves a different income type. Choosing the right one prevents wasted paperwork.

Form	Purpose	Who Submits It	Withholding Style
W-4	Wage withholding	Employee to employer	Tables based on filing status and dependents
W-4P	Pension and annuity withholding	Retiree to plan administrator	Wage-table style after the 2022 redesign
W-4S	Third-party sick pay	Recipient to insurer	Whole-dollar amount per payment, $20 minimum
W-4V	Government benefits, including SSDI and unemployment	Recipient to paying agency	Flat 7%, 10%, 12%, or 22%

The consequence of mixing them up is silent inaction. A retiree who sends W-4S to their pension plan triggers nothing, since the plan only honors W-4P. A SSDI recipient who tries W-4S gets the same nothing-happens result.

A common misconception is that one of these forms can replace another to “lock in” a custom rate. Only W-4S allows a freely chosen whole-dollar number, while W-4V is locked to four set rates.

Mistakes to Avoid on Form W-4S

Sick filers under stress often slip on the same handful of details. Each mistake below has a real cost.

Sending W-4S to your employer instead of the insurer. The employer cannot act on it, and the form effectively does nothing. The result is no withholding and a possible §6654 penalty.
Asking for less than $20 per week. The insurer must reject the request under Treas. Reg. §31.3402(o)-3. You then receive zero withholding and may not realize until year-end.
Including cents on Line 1. The form requires whole dollars only. A request of “$47.50” gets bounced back, costing you weeks of withholding while you redo the form.
Skipping the worksheet entirely. Guessing the number leads to over-withholding (lost cash flow during illness) or under-withholding (penalty plus tax due).
Forgetting to sign and date. An unsigned form is legally void per the W-4S instructions, so the insurer ignores it.
Treating workers’ comp like sick pay. Workers’ comp is tax-free under IRC §104(a)(1), so W-4S does not apply. Filing it triggers needless withholding from a tax-free benefit.
Ignoring the FICA six-month rule. Sick pay is subject to Social Security and Medicare tax for the first six calendar months after the last month worked, per IRC §3121(a)(4). After six months, FICA stops, but income tax through W-4S continues.
Failing to revoke W-4S after returning to work. Once you are back to regular wages, the third-party insurer should not still be withholding. Send a written revocation per the Treasury rules.
Not coordinating with a spouse’s W-4. Joint filers commonly under-withhold because each form ignores the other’s income, just like the IRS Withholding Estimator warns.

The negative outcome of any of these is the same: a tax bill in April that you could have prevented for free.

State Income Tax Nuances on Sick Pay

Federal Form W-4S only handles federal income tax. State tax on third-party sick pay depends on each state’s rules, and most insurers do not automatically withhold state tax without a separate state form. The Federation of Tax Administrators maintains links to every state’s withholding form.

States like California, New York, and New Jersey treat employer-paid sick pay as taxable wages and offer their own withholding forms, such as California DE 4 or New York IT-2104. Florida, Texas, and seven other states with no income tax skip the issue entirely.

The consequence of ignoring state withholding is a state-level underpayment penalty on top of the federal one. New York, for example, charges interest from the original due date plus a late-payment penalty under Tax Law §685.

A common misconception is that federal W-4S “covers” state. It does not. You must file a separate state withholding request with the same third-party insurer.

Do’s and Don’ts of Form W-4S

Do project your full-year income on the worksheet because accurate inputs produce accurate withholding.
Do send the form directly to the third-party insurer because only that payer can act on it.
Do keep a signed copy for at least three years to match the IRS records-retention guidance.
Do revisit the form mid-year if your income changes, because stale numbers cause over- or under-withholding.
Do use the IRS Withholding Estimator alongside the worksheet for sharper accuracy.
Don’t request below $20 weekly because the insurer must reject the form under federal regulation.
Don’t sign without dating, because an undated form is treated as defective.
Don’t assume your employer can fix the form, because only the third-party insurer is empowered to withhold here.
Don’t forget to revoke when you return to active payroll status, because lingering withholding can create a refund-only year.
Don’t overlook state withholding, because federal compliance does not satisfy state law.

Pros and Cons of Filing W-4S

Pro: It prevents a surprise April balance due, since taxes leave each check evenly.
Pro: It avoids the §6654 underpayment penalty, which compounds daily.
Pro: It is fully customizable in whole-dollar amounts, unlike W-4V’s four flat rates.
Pro: The insurer reports the withholding on a year-end W-2, simplifying the tax return.
Pro: It is free, voluntary, and revocable at any time in writing.
Con: It reduces immediate cash flow during a period when medical bills may be high.
Con: Estimating the right amount takes time and basic tax math.
Con: Mistakes on the form delay withholding, since most insurers wait for a clean copy.
Con: It does not address state income tax, so a second form is often needed.
Con: Over-withholding effectively gives the IRS an interest-free loan until you file.

Court Rulings and IRS Guidance Worth Knowing

Court rulings and IRS releases shape how W-4S works in practice. Knowing them prevents avoidable disputes.

In Rev. Rul. 56-632, the IRS confirmed that third-party sick pay is wages for income tax purposes when the employer paid the premiums. That ruling laid the groundwork for W-4S withholding rules under §3402(o).

The Tax Court reinforced taxpayer responsibility in Mays v. Commissioner, T.C. Memo 1985-262, holding that ignorance of withholding rules does not excuse the underpayment penalty. The lesson is that voluntary does not mean optional from a planning standpoint.

The IRS publishes annual guidance through Publication 15-A, Employer’s Supplemental Tax Guide, which dedicates a full section to sick pay reporting. Insurers rely on it to issue Form W-2 with the proper boxes filled, including Box 13 “Third-party sick pay” checked.

The consequence of ignoring this guidance falls on insurers and recipients alike. A miscoded W-2 forces an amended return, while a missing W-4S forces a balance due plus penalty.

A common misconception is that sick pay always lands on a 1099. Third-party sick pay is reported on Form W-2, not 1099, because it is treated as wages under IRC §3121(a).

FAQs

Is Form W-4S mandatory?

No. Federal law makes W-4S voluntary under IRC §3402(o), but skipping it can leave you with a large April tax bill plus a §6654 underpayment penalty.

Can I withhold less than $20 per week on W-4S?

No. The Treasury regulation sets a hard $20 weekly minimum, and any request below that is rejected outright by the insurer.

Do I send Form W-4S to the IRS?

No. You give the signed form directly to the third-party insurer paying your sick pay; the IRS never receives a copy.

Is third-party sick pay taxable?

Yes, when your employer paid the premiums with pre-tax dollars, the benefits are taxable wages under IRC §105(a) and reported on a W-2.

Can I change my W-4S amount mid-year?

Yes. You can submit a new W-4S to the insurer at any time, and the change takes effect within eight days of receipt.

Does W-4S withhold Social Security and Medicare tax?

No. W-4S only covers federal income tax; FICA is withheld separately by the insurer for the first six months after your last month worked.

Should SSDI recipients file W-4S?

No. Social Security disability beneficiaries instead file Form W-4V and choose 7%, 10%, 12%, or 22% withholding.

Is workers’ compensation covered by W-4S?

No. Workers’ comp is fully tax-free under IRC §104(a)(1), so withholding through W-4S does not apply.

Can I revoke W-4S after returning to work?

Yes. Send a signed written revocation to the insurer; under Treasury rules they must stop withholding by the next regular payment cycle.

Will I still get a W-2 if I file W-4S?

Yes. The third-party insurer issues a W-2 reporting your sick pay in Box 1 and your federal withholding in Box 2, with Box 13 “Third-party sick pay” checked.

Does state income tax follow W-4S?

No. W-4S is federal only, and most states require their own withholding form, such as California DE 4 or New York IT-2104.

Can I claim allowances on W-4S like on the old W-4?

No. Form W-4S only accepts a single whole-dollar amount on Line 1, with no allowances, dependents, or filing-status fields.

Is over-withholding refundable?

Yes. Any excess federal income tax withheld through W-4S returns to you as part of your federal refund when you file Form 1040.

Does filing W-4S protect against a §6654 penalty?

Yes, when the withholding is large enough to meet the safe-harbor under IRC §6654(d), it shields you from the underpayment penalty.

Can self-employed taxpayers use W-4S?

No. Self-employed individuals receiving private disability benefits they paid for personally are usually tax-free; if taxable, they pay through Form 1040-ES instead.

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