IRS Issues New Form W-4 for 2020

IRS Issues New Form W-4 for 2020 600 601 Balance Point Team

The IRS has issued a new Form W-4 for all employees to use beginning in 2020. The form was redesigned to comply with the Tax Cuts and Jobs Act (TCJA) of 2017, which required that significant changes be addressed. The IRS hopes the new form will be easier for employees and employers to understand, while increasing withholding accuracy.

Here’s what you need to know about it:

There Are No More Withholding Allowances

In the past, the value of a withholding allowance was tied to the amount of the personal exemption. Due to the TCJA, employees currently cannot claim personal exemptions or dependency exemptions. 

Instead of claiming allowances, workers will now use the new Form W-4 to provide their employer with the information needed to calculate the amount of income tax to withhold.

Most Employees Are Not Required to Complete a New Form W-4

Employees who have furnished Form W-4 in any year before 2020 are not required to fill out a new form solely because of the redesign. Employers will continue to compute withholding based on the information from the employee’s most recently furnished Form W-4.

However, the new form is required for all new hires who will receive their first paycheck after 2019, and for employees who have completed a Form W-4 before 2020 and want to make changes to their withholding in 2020.

We’re Here to Help

Coupled with your accountant’s expertise, Balance Point can help you tackle the new Form W-4 with confidence. 

Our HRIS has been updated and is current with the new W-4 for 2020. It is available for all new hires within the onboarding module. The “wizard” format and auto-fill functionality simplifies the process for both employee and employer. 

For additional help, access the IRS resources below, or contact a Balance Point representative.

IRS Resources

IRS FAQs on the Form W-4

2020 Publication 15-T, Federal Income Tax Withholding Methods 

2020 Form W-4, Employee’s Withholding Certificate 

IRS Tax Withholding Estimator

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