After much anticipation, the IRS released the 2020 W-4 today. The W-4 is the tax form filled out by employees which enables employers to calculate the federal income tax withholdings from employee pay checks. The Tax Cuts and Jobs Act of 2017 overhauled the tax code including doubling the standard deduction. Accordingly, a new W-4 was necessary to complement these tax code changes. The most notable change to the W-4 is no more allowances. Employees may recall that in previous years, the W-4 asked for the number of personal exemptions (allowances) an individual claimed – the greater the number of allowances, the less income taxes would be withheld. The revised W-4 attempts to simplify the process asking questions, featuring simplified worksheets, and working with actual dollar amounts as opposed to the personal exemption methodology.
Current employees who are content with their previously completed W-4 can let their withholding status stand. However, new employees or people wishing to update their withholdings will be required to use the 2020 W-4.
The release of the W-4 is always a good reminder for a payroll “checkup” to ensure the proper income taxes are being withheld from employee pay checks, but individuals desiring to make changes for 2020 should be prepared for a new W-4 form and a different experience than in the past.
You can view the new W-4 on the IRS website: