Employees who work in a locality with state income tax must fill out a withholding form. Learn which state W-4 form your employees must use.Gov or File Form 760ES. Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay. Give Form W-4 to your employer. If you live in Washington, D.C., Pennsylvania, Virginia or West Virginia, you should file with your home state. Do not use the state income tax withheld from form W-2 as the tax paid to the other state. All U.S. employers must properly complete Form I9 for every individual they hire for employment in the United States. Form W-4 tells your employer or employer's payroll representative how much federal income tax withholding to keep from each paycheck. Health insurance premiums may be included in a state's mandatory deductions; they are mandatory deductions for federal employees.