Stay updated on changes to IRS form W-4

The Internal Revenue Service released the redesigned 2020 Federal W-4 Form. The updated form implements the changes initiated by the Tax Cuts and Jobs Act and is meant to reduce complexity for both employees and employers. The IRS has championed the changes as necessary steps in increasing the transparency and accuracy of the employee withholding tax system.

Employees required to complete the 2020 W-4

The first issue faced by many employers is determining who must fill out the new W-4 form. Only a newly hired employee whose first pay period is in 2020 and any employee who wishes to adjust withholdings in 2020 must use the redesigned form.

Employees hired before 2020 who don't wish to adjust their withholdings aren't required to submit a new form merely because of the redesign. They must be aware that if they don't submit a new W-4, withholding will continue to be based on the previous W-4 form.

Step-by-step analysis of the 2020 W-4

A monumental change to the W-4 is the form's method of calculating an employee's withholding amount. Previously, employee withholding was tied to allowances. Since the Tax Cuts and Jobs Act eliminated withholding allowances, employees now must claim dependents and other deductions directly on the W-4 to calculate their withholding amount. There are five steps on the redesigned W-4 to account for the changes to the employee withholding calculations.