New W-4 Form
Form W-4

The IRS has released an updated Form W-4 for 2020 — now titled “Employee’s Withholding Certificate”. The form was updated to reflect changes made to the tax code by the Tax Cuts and Jobs Act of 2017.

What’s New?

The primary goal of the revised form was to make it simpler for employees to complete and less burdensome on employers and payroll processors. The new form is one page broken down into five steps:

  • Step One — Enter personal information.
  • Step Two — Indicate multiple jobs or if spouse works.
  • Step Three — Claim dependents.
  • Step Four — Other adjustments, like other non-job income, non-standard deductions, and extra withholdings.
  • Step Five — Sign the form.

Only two steps are required for all employees: step one and step five. Steps two through four only need to be completed if those steps apply (i.e. the employee has multiple jobs, investment or retirement income, or wants to claim dependents).

Important Points

There are a few important points regarding the new Form W-4:

  • All new employees hired as of January 1, 2020 must complete the new form.
  • Current employees are not required to complete a new W-4, but may choose to do so. For employees that do not choose to complete a new W-4, employers can still compute withholdings based on the most recent completed W-4.
  • Any adjustments made to employee withholdings after January 1, 2020 must be made using the new W-4 .

The IRS encourages employees to use the IRS Tax Withholding Estimator to assist in completing the new Form W-4. The calculator is designed to help employees estimate any additional withholdings. The estimator is especially helpful for employees who face an unexpected tax bill or a penalty after filing a tax return last year or who has or will experience a change in martial status, dependents, income, or jobs this year.