On Dec. 5th, 2019, the IRS released the long-awaited final version of the 2020 Form W-4. The new form is designed to make accurate income-tax withholding easier for employees starting in 2020.
Here are some of the key points employers should note:
- All new employees hired as of Jan. 1, 2020, must complete the new form.
- Current employees are not required to complete a new form but can choose to adjust their withholding based on the new form.
- Any adjustments made after Jan. 1, 2020, must be made using the new form.
Employers can still compute withholding based on information from employees’ most recently submitted Form W-4 if employees choose not to adjust their withholding using the revised form.
The IRS also posted FAQs about the changes incorporated in the revised form. Here are some of those answers:
1. Where can I download the new Form W-4?
About Form W-4, Employee’s Withholding Certificate
2. Why redesign Form W-4?
The new design reduces the form’s complexity and increases the transparency and accuracy of the withholding system. While it uses the same underlying information as the old design, it replaces complicated worksheets with more straightforward questions that make accurate withholding easier for employees.
3. Whats Changed?
The 2020 Form W-4 is presented on a single, full page, followed by instructions, worksheets and tables. In place of withholding allowances, the new W-4 includes a process with five possible steps for declaring additional income, so employees can adjust their withholding with varying levels of accuracy, privacy and ease of use.
4. What happened to withholding allowances?
Allowances are no longer used for the redesigned Form W-4. This change is meant to increase transparency, simplicity, and accuracy of the form. In the past, the value of a withholding allowance was tied to the amount of the personal exemption. Due to changes in law, currently you cannot claim personal exemptions or dependency exemptions.
Read more about the new form W-4 here: IRS Website