By Stacey Sommerhauser, SPHR, PHRca, SHRM-SCP
The Internal Revenue Service (IRS) gave the W-4 a makeover for 2020. This is the first major redesign of the form since 1987. The 2020 W-4 will look very different from previous versions to you and your employees, as the IRS has omitted the “allowances” which had been used to calculate withholdings. Previously your allowances were tied to your number of personal exemptions; however due to changes in the law, you will no longer claim personal exemptions or dependency exemptions. On the new 2020 W4 employees will be able to enter their full tax credit in dollar amounts. The IRS states the new design will reduce the form’s complexity and increase transparency with more straightforward questions that make for more accurate withholdings.
You may be asking, “Are all employees required to complete the 2020 W-4?” and the answer is “No.” Only newly hired employees and employees wishing to make adjustments to current withholdings will be required to use the new 2020 W-4. Current employees who do not complete the 2020 W-4 will continue to have withholdings based on information from a previously completed W-4. Employees may also use the IRS’s Tax Withholding Estimator (link: https://www.irs.gov/individuals/tax-withholding-estimator) to see if adjustments should be made to current withholdings.
The new withholding certification can be found by clicking here and should be used for all new employees who will receive their first paycheck in 2020. It is highly recommended that employees read the instructions prior to completing the form. Steps 1 and 5 are required by all completing the form and Steps 2 through 4 are optional.
The IRS has created 20 helpful FAQs (click here) for those wanting more information as your employees complete the form.