New Form W4 for 2020
At the end of 2019, the Internal Revenue Service released a final Form W-4 for use in 2020. Employees who have submitted Form W-4 in any year before 2020 are not required to submit a new form merely because of the redesign. Employers should continue to compute withholding based on the information from the employee’s most recently submitted Form W-4.
Employees complete the Form W-4 so that their employers can withhold the correct amount of federal tax from their paycheck. A significant change for the 2020 form is that it does not have withholding allowances because employees may no longer claim personal exemptions or dependency exemptions. Previously, the value of a withholding allowance was tied to the amount of the personal exemption.
"While employers cannot require existing employees to complete the new Form W-4 for 2020, any changes to federal tax withholding must be made using the new Form W-4," says Jill Grasso, CheckWriters Tax Manager.
"In addition, employers can direct their employees to the IRS Estimator, which can be found on the IRS website. This convenient tool provides a more accurate tax withholding projection based on family income for joint tax filers."
Click here to access the Tax Withholding Estimator >
The new form is divided into five steps and employees will provide information for the steps that apply to them (steps 2-4 may not).
Step 1: Enter personal information (including marital status).
Step 2: Account for multiple jobs (employee), or whether the employee’s spouse works. This step is completed if the employee holds more than one job at a time or is married filing jointly and their spouse also works. The correct amount of withholding depends on income earned from all jobs.
Steps 3 and 4: Claim dependents and other adjustments (specifically, other income that is not from jobs, deductions, and extra withholding). Steps 3 – 4 are completed on Form W-4 for only one job, and these steps are left blank for the other jobs. Withholding is most accurate if an employee completes Steps 3 – 4(b) on the Form W-4 for the highest paying job.
Step 5: Employee signature and date.
Publication 15-T (still in draft form) assists employers in determining the amount of federal income tax to withhold from their employees’ wages. You can read more about Publication 15-T here.
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