The IRS has revised the Form W-4, which is the employee’s federal tax withholding certificate. This new form published in 2020 is substantially different than previous versions of the form and has been updated to comply with the income tax withholdings requirement under the 2018 Tax Cuts and Jobs Act.
The Internal Revenue Service (IRS) is NOT requiring all existing employees to complete the revised form but IS requiring any employee hired in 2020 or any existing employee who wants to change his or her withholdings to complete the new form.
The new 2020 Form W-4 has been designed to work with prior year withholding tables and has eliminated withholding allowances while adding lines for additional income, deductions and tax credits for employees to complete.
Employees are encouraged to review their current deductions to determine if they need to make adjustments to their current withholding. Employees are encouraged to use the IRS’s Tax Withholding Estimator on the IRS website.
Before completing the 2020 Form W-4, employees should follow the instructions that are included with the form. Steps 1 and 5 are required to be completed. Steps 2 through 4 are optional and are only to be completed if they are applicable to the employee.
- Step 1 is for the employee’s personal information;
- Step 2 is to be completed for employees with multiple jobs;
- Step 3 is used to claim tax credits for any qualified/eligible dependents;
- Step 4 is for other adjustments (additional income such as interest and dividends, itemized deductions that exceed the standard deduction, and extra tax you want withheld);
- Step 5 Signature
You may find the IRS’s Frequently Asked Questions helpful as you complete the form.