IRS releases 2020 W-4

Posted December 16, 2019

As part of ushering the new year, new employees or those who wish to make income withholding changes will need to be given the latest version of the Form W-4 come 2020. While the IRS does suggest that employees consider completing a new Form W-4 each year and when their personal or financial situation changes, just because a new version is available does not, however mean that all employees must submit a new W-4.

Changes include the following:

• Employee withholding should easier match their tax liability. If employees want to get a refund, they can enter additional amounts to withhold.
• Employees need to account for multiple jobs.
• Only two parts of the form is required to be completed by employees – “Step 1,” which includes personal information, and “Step 5,” which is the signature. The other steps involve multiple jobs, dependents, or other adjustments.

The same set of withholding tables will be used for both sets of forms, so employers should not need to install new systems.

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. Employees might still have questions.

Interestingly, allowances are no longer used. In the past, the value of a withholding allowance was tied to the amount of the personal exemption. Due to changes in law, particularly the Tax Cuts and Jobs Act, which became effective in 2018, employees may not currently claim personal exemptions or dependency exemptions.

While employers may ask employees hired before 2020 to use the 2020 version, those employees are not required to do so.

While the release of this new Form W-4 version will likely not result in the IRS site being overloaded with employers racing to get their hands as during a Black Friday sale, being prepared for this change will help employers be prepared.

This article was written by Darlene M. Clabault, SHRM-CP, PHR, CLMS, of J. J. Keller & Associates, Inc.