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Update on 2020 IRS Form W-4

This blog post was originally published on June 6, 2019 and updated on Dec. 31, 2019.

This summer, 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), and 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 the case 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 his or her 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 he or she may have.
  • Step five is where the employee can sign the form.

Looking to the future

Starting Jan. 1, the revised Form W-4 is required to be used by new hires and employees making adjustments. However, employers must continue to honor valid pre-2020 W-4 forms on file if changes are not needed. Employers may ask, but may not require, employees to replace existing pre-2020 forms, and may not treat employees with older forms as failing to submit (except for those claiming “Exempt” status who are required to re-submit by Feb. 15 each year).

For a list of FAQs, visit the IRS FAQs on the draft 2020 Form W-4.

For more information regarding withholding, employees may reference the IRS Paycheck Checkup website.

This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. Contact a lawyer licensed in your jurisdiction for advice on specific legal problems.