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The New IRS Form W-4 (2020) – What You Need to Know
 
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The 2017 Tax Revision/Tax Cuts and Jobs Act, passed by the US Congress, suspended personal exemptions until 2026. The new Form W-4 (2020) is designed to accommodate the 2017 Act’s requirements.  The IRS has posted the final version of the new Form W-4 (2020).  Click here to view the form.

Which Employees Need to Complete the New Form W-4 (2020)?

Only employees hired 1/1/2020 and later and those making changes to their tax status must use the new W-4. Employees hired prior to 1/1/2020 do NOT need to fill out a new form and employers must not require these employees to fill out a new W-4.

What if an Employee is Hired and Does Not Submit the New Form W-4 (2020)?

Previously the employer would calculate the employee’s deductions based on the marital status of single with 0 deductions. The IRS is stating that, for the time being, this course of action will continue. However, the IRS and Treasury department anticipate issuing further guidance for these situations.

Does the IRS Provide Any Assistance to Employees?

The IRS suggests using the Tax Withholding Estimator available at this URL: www.irs.gov/W4app  It will provide the most accurate withholding information and information on how to best complete Form W-4.

What Are the Steps to Completing the New Form W-4 (2020)

Step 1:  Complete the Personal Information fields for name, address, and filing status

Step 2: This Step is for employees with more than one job and/or those who are married filing jointly and their spouse also works. Standard deduction and tax brackets will be divided equally between all jobs.

  • This Step was added because if an employee has more than one job and/or is married filing jointly and both the employee and spouse work, more money should usually be withheld from the combined pay for all jobs than would be withheld if each job was considered individually. The old Form W-4 accounted for multiple jobs using separate detailed instructions and worksheets not part of Form W-4, which many employees overlooked.

Step 3: Employees with qualifing dependants and/or children should complete this step.  The employee will calculate the dollar amount for the appropriate deductions.

Step 4: This step enables employees to calculate optional and/or other adjustments. Examples may be an employee who wants tax withheld for other income for which federal withholding is not taken, or the employee may want to claim deductions other than the standard deduction. Also, an employee may simply request additional withholding each pay period.

Step 5: Signature and Date

How Does an Employee Determine if He or She is Exempt From Withholding?

  • Page 2 of the new Form W-4 (2020) provides instructions on how to determine if a person is exempt from withholding. These instructions indicate that, if a person determines he or she is Exempt, they should write “Exempt” in the space below Step 4c and then complete steps 1 and 5.

How is Primepoint Helping Customers with the New Form W-4 (2020)?

Beginning 1/1/2020 the New Hire Wizard in Primepoint’s system will accommodate the new Form W-4 (2020) in addition to continuing to accommodate the old Form W-4.  When adjusting withholding for an existing employee the system will ask if the employee filed out a new Form W-4 (2020).  If yes, the system will open up the new fields for the appropriate calculations. The system will have attributes for the new Form W-4 (2020) within the Federal tax group. Primepoint will be using the Percentage Method Tables for Automated Payroll Systems to calculate federal withholding.

In addition, clients using Primepoint's onboarding technology can have their employees fill out an electronic version of the W-4 during the onboarding process which will automate some of the complexity in the new form