When employees receive sick pay, it often comes from a third-party payer (such as an insurance company) rather than directly from their employer. To manage income tax withholding on these payments, the IRS has a specific form — Form W-4S, Request for Federal Income Tax Withholding from Sick Pay.

This guide will explain everything you need to know about Form W-4S, including who must complete it, how to fill it out, when to use it, and what happens if you miss it. Whether you are an employee receiving sick pay or a payer processing it, this article breaks down every detail.

What is Form W-4S?

IRS Form W-4S is used by employees to request federal income tax withholding from sick pay received from a third-party payer. Sick pay includes payments for time off due to illness, injury, or disability.

Without this form, sick pay may not have federal income tax withheld, potentially leading to a larger tax bill when filing your return. Completing W-4S allows employees to authorize the payer to withhold a specific dollar amount from each sick pay payment.

Who Must Complete Form W-4S?

Employees must complete Form W-4S if:

• They are receiving sick pay from an insurance company or third-party administrator.
• They want to have federal income tax withheld from those payments.
• They expect their total tax liability to increase without withholding.

If no tax is withheld, the employee may need to make quarterly estimated tax payments instead. Filing W-4S helps avoid underpayment penalties.

Who Should Request Form W-4S?

Not every employee automatically receives Form W-4S. Typically, it should be requested by:

• Employees receiving disability or medical leave payments from third-party payers.
• Employees anticipating large sick pay amounts, which may push them into a higher tax bracket.
• Workers on long-term leave who want to maintain consistent withholding rather than adjusting later.

The payer (insurance company, trust, or employer acting as a third party) should provide Form W-4S upon request.

What Type of Sick Pay is Eligible for W-4S?

The IRS considers the following types of payments as sick pay eligible for W-4S withholding:

• Payments for temporary or long-term disability.
• Maternity or paternity leave payments when covered by an insurance policy.
• Payments due to non-work-related illness or injury.
• Wage replacement benefits paid during a medical leave period.

Not eligible: Workers’ compensation payments, state unemployment benefits, or Social Security disability benefits. These are covered under different tax rules.

How to File W-4S for Maternity Leave?

When employees go on maternity leave and receive pay from an insurance provider:

1. Request Form W-4S from the payer or download it from the IRS website.
2. Enter personal details, Social Security Number (SSN), and payer information.
3. Specify the fixed dollar amount to be withheld from each sick pay check.
4. Submit the completed form directly to the insurance company or third-party payer, not to the IRS.

This ensures federal taxes are withheld regularly from maternity leave benefits, avoiding a tax surprise during filing season.

How Often Need to Complete W-4S?

• A new Form W-4S must be filed whenever the employee wants to change the withholding amount.
• If circumstances remain the same, the original W-4S stays in effect.
• Employees can adjust withholding multiple times during the year if needed

How to Complete W-4S – Line by Line Instructions

Form W-4S is straightforward, containing just a few sections:

1. Name, Address, and SSN – Provide accurate personal identification.
2. Payer’s Name – Enter the insurance company or third-party payer responsible for the sick pay.
3. Withholding Request – Enter the specific dollar amount you want withheld from each sick pay check. (Note: It must be a flat dollar amount, not a percentage.)
4. Signature and Date – Authorize withholding by signing and dating the form.

After completion, give the form to the payer, not the IRS.

Difference Between W-4R vs W-4S

While both forms deal with federal income tax withholding, they apply to very different situations.

Form W-4R

• Purpose: Used to elect withholding on retirement distributions.
• Who Uses It: Retirees, account holders, or anyone taking withdrawals from pensions, IRAs, or annuities.
• Type of Income Covered: Distributions from retirement accounts and annuities.

Form W-4S

• Purpose: Used to request withholding on sick pay.
• Who Uses It: Employees receiving sick pay from an insurance company or other third-party payer.
• Type of Income Covered: Sick pay benefits, including maternity leave payments, disability income, and other medical leave wage replacements.

In short: W-4R applies to retirement income, while W-4S applies to sick pay income.

What Payers Do with W-4S?

Once received, the payer must:

• Apply the requested withholding amount to every sick pay check issued.
• Keep the form for their records; it is not submitted to the IRS.
• Adjust withholding only when the employee submits a new W-4S.

This ensures compliance and accurate withholding reporting.

What Happens If You Miss Completing W-4S?

If an employee does not complete W-4S:

• No federal income tax will be withheld from sick pay by default.
• The employee may face a tax bill or underpayment penalty at year-end.
• They may need to make quarterly estimated tax payments instead.

Therefore, filing W-4S is crucial for anyone who expects taxable sick pay and wants to avoid a tax-time shock.

FAQs on W-4S

1. Do I send Form W-4S to the IRS?
No. The completed form must be submitted to the payer (insurance company or third party), not the IRS.

2. Can I request percentage withholding instead of a flat amount?
No. W-4S only allows a specific dollar amount per payment.

3. Can W-4S cover workers’ compensation or unemployment?
No. These payments follow different tax rules. W-4S applies only to sick pay from third parties.

4. How do I change my withholding?
File a new W-4S with the payer whenever you want to adjust the amount withheld.

5. Is sick pay always taxable?
Generally, yes — unless it’s workers’ compensation or benefits paid under certain employer-sponsored disability insurance plans.

Final Thoughts

IRS Form W-4S plays a vital role in managing taxes on sick pay, ensuring that employees do not face unexpected liabilities at tax filing time. By filing W-4S, employees can request federal income tax withholding on payments received from insurance companies or other third-party payers.

Whether you’re going on maternity leave, dealing with temporary disability, or receiving other forms of sick pay, completing W-4S ensures smoother tax compliance. Employers and payers should also handle the form carefully to maintain compliance with IRS rules.

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