HR Compliance

Updated Draft: 2020 IRS Form W-4

By

Zachary Gregory

| Jun 6, 2019

Recently, the IRS proposed an important revision to the W-4. The goal of the W-4 has always been to ensure withholdings align with the employee’s ultimate tax liability, and this proposed revision is intended to ensure continued alignment of the two.

The 2020 W-4 has been revised to reflect the suspension of personal exemptions under the Tax Cuts and Jobs Act (Pub. L. 115-97). Its current draft requires a significant amount of input by the employee. The new form has 5 steps:

  • Step one includes demographic information. Employees will now be able to choose “Head of household” as a filing status.
  • Step two allows the employee to account for multiple jobs. To complete this section, the employee can either complete a worksheet or calculator and enter an adjustment later in the form, or the employee can check a box that will impact the withholding. If the employee checks this box, a larger amount will be withheld from their paycheck than normally would be under the regular withholding tables. The employee’s filing status and income will determine the actual amount withheld. If checked, the employee can generally expect a refund.
  • Step three allows the employee to enter information on their dependents and tax credits.
  • Step four allows the employee to make other adjustments. Here, the employee can enter information on any other income or deductions they may have.
  • Step five is where the employee can sign the form.

Looking to the future

Employers may not see a mandatory companywide change, as the IRS has stated it does not have the legislative authority to require employees to file a new W-4. However, after Dec. 31, 2019, employers will not be able to to accept a pre-2020 W-4. This means that there will be a revised withholding method that will accommodate both versions of the form.

This is the IRS’ first draft of the 2020 W-4. The IRS will release a second draft this summer and a final one in the fall, after which there will be a comment period that allows employers to provide input and prepare their workforce for the upcoming changes.

About the Author

Zachary Gregory

As a compliance attorney for Paycom, Zach Gregory monitors legal and regulatory changes at the state and federal levels, focusing on payroll and garnishment laws, to ensure the Paycom system is updated accordingly. He previously worked at a law firm as a tax attorney. He holds a bachelor’s degree from Oklahoma Christian University and a J.D. from Oklahoma City University. Outside of work, Gregory enjoys playing in the backyard with his two boys, and finding new restaurants with his wife and high school sweetheart, Kellyn.

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