The IRS has released a draft of the new Form W-4, Employee’s Withholding Allowance Certificate which replaces the current W-4 starting in 2020. Employees complete Form W-4 so that their employer withholds the correct amount of federal income tax from their pay. The redesigned Form W-4 provides taxpayers a simple, more accurate method in determining their withholding amounts beginning next year.
The Tax Cuts and Jobs Act introduced major changes affecting the correct amount of withholding for many taxpayers. Personal and dependent exemptions claimed on tax returns prior to 2018 tied into withholding allowances claimed previously on Form W-4. Exemption amounts deducted on a tax return were reduced to $0, so withholding allowances aren’t a factor on the new W-4. Instead, factors impacting tax withholding from an employee’s paycheck are filing status and the amount of the household’s salary.
The new Form includes sections for taxpayers with multiple jobs, claiming dependents and an optional section for other adjustments. The accompanying worksheets have been simplified. According to the IRS, they ask more straightforward questions that make accurate withholding easier for employees. Current employees who have previously submitted Form W-4 don’t have to submit a new form. It is, however, crucial for taxpayers with dependents and/or multiple jobs to consider filing the new form. This will help ensure the correct amount of withholding.
The IRS is accepting feedback on the new Form W-4 until the end of June. They remind taxpayers and employers of the following:
- The new form W-4 is for use in 2020, so for the remainder of 2019, continue to use the current Form W-4.
- The final version of the 2020 form is scheduled for release in November.
- Taxpayers should perform a Paycheck Checkup to ensure the correct amount of tax is being withheld from their pay.
- Current employees who have submitted Form W-4 don’t have to submit a new form. New employees must use the redesigned form starting in 2020.