Changes to Form W-4 for 2020

On December 5, 2019, the Internal Revenue Service (IRS) issued the redesigned 2020 Form W-4, Employee’s Withholding Certificate. The new form no longer uses withholding allowances but takes a five-step approach along with the new Publication 15-T, Federal Income Tax Withholding Methods, to determine an employee’s withholding.

 

2020 Form W-4: Five step process

Employees will now use dollar amounts rather than enter the number of withholding allowances. Certain categories that were on prior forms have been eliminated or replaced.

Step 1: Employee’s personal information and his/her anticipated filing status to determine standard deduction and tax rates for federal tax withholding calculation.

Step 2: For an employee with more than one job at the same time or are married filing jointly and both employee and spouse work.

Step 3: For an employee, who can claim dependents for the child tax credit and/or other eligible dependents when filing a tax return.

Step 4: For an employee who has other income, adjustments or would like extra withholding withheld each pay period.

Step 5: Employee must sign and date the form.

Employees must complete Steps 1 and 5 when submitting the 2020 Form W-4. Completing only Steps 1 and 5 will result in withholding based on the employee's filing status standard deduction, wage amount, pay period and tax rates, with no other adjustments.

Steps 2 through 4 should be completed only if they apply to the employee’s tax filing situation. The IRS states withholding will more accurately reflect the employee’s tax liability.

For additional information please reference the 2020 Form W-4 general instructions or Publication 15-T

 

Who must complete the 2020 Form W-4?

Current employees who have furnished Form W-4 in any year before 2020 are not required to furnish a new form merely because of the redesign. Employers will continue to compute withholding based on the information from the employee's most recently furnished Form W-4.

New or rehired employees first paid after tax year 2019 must use the redesigned form. Similarly, current employees who wish to adjust their withholding must use the redesigned form.

 

Updated Tax Withholding Estimator

The IRS is encouraging employees to use the Tax Withholding Estimator when filling out their 2020 Form W-4 to help ensure correct taxation. Employees should consider using the withholding estimator if:

  • employee expects to work only part of the year (this does not apply if you are only switching jobs),
  • employee had a large balance due or refund last year and it is no longer the beginning of the current year,
  • employee has dividend or capital gain income or are subject to additional taxes, such as the additional Medicare tax,
  • employee has self-employment income, 
  • employee prefers the most accurate withholding for multiple job situations, or 
  • employee prefers to limit information provided in Steps 2–4 but does not want to sacrifice accuracy

International Employees and Students

International employees and students identified by the IRS as being in a Non-Resident Alien status will complete the redesigned W-4 as follows:

  • complete Step 1 as “Single” status;
  • write the initials NRA in the space below Step 4(c) and;
  • sign and date the form in Step 5.

For additional information please reference the 2020 Form W-4 general instructions along with Notice 1392.

 

IRS Resources