IRS Proposed New W-4 Form
Today, the IRS released draft of the 2020 Form W-4, Employee’s Withholding Allowance Certificate, which will make accurate withholding easier for employees starting next year. You can preview the form here, but please note, it is NOT final and this version is not to be used.
W-4 Form Purpose
A W-4 Form is a piece of the new hire paperwork you fill out upon starting a job. The goal of the W-4 is to let your employer know how much money to withhold from your paycheck for federal taxes. You used to fill in “allowances” – or exemptions – one for you, your spouse, and each child. The more allowances you claimed, the less money that was withheld from your paycheck. Accurately filling out a W-4 helps you during tax filing to avoid a large overpayment/balance due.
The form is being updated because of changes within the new tax law, Tax Cuts & Jobs Act (TCJA).
The redesigned Form W-4 no longer uses the concept of withholding allowances described above. Due to changes in TCJA, personal exemptions are currently not a central feature of the tax code. The goal is to create simplicity. “The new draft Form W-4 reflects important feedback from the payroll community and others in the tax community,” said IRS Commissioner Chuck Rettig. “The primary goals of the new design are to provide simplicity, accuracy and privacy for employees while minimizing burden for employers and payroll processors.”
The IRS expects to release a near-final draft of the 2020 Form W-4 in mid-to-late July to give employers and payroll processors the tools they need to update systems. A final version will be released in November. Employees who have submitted a Form W-4 in any year before 2020 will not be required to submit a new form merely because of the redesign.
If you have questions about what these changes mean for you or your organization, please contact your hb&k consultant.