Changes to W-4 Form in 2020

The Internal Revenue Service (IRS) has released a new W-4 Form that will replace the current form beginning on Jan. 1, 2020. 

What is the W-4 Form?

As a courtesy reminder, the W-4 Form is the form you complete, usually at the time of hire, to designate your filing status and dependents that, in turn, drive the amount of federal income taxes withheld each paycheck.  Of course, employees can and do submit new W-4 Forms throughout the year to manage their tax payments and budgets.

Why is the IRS publishing a new form? 

The new form was mandated by the Tax Cuts and Jobs Act of 2017.  The intent of the new form is to make tax withholdings more accurate each paycheck.  The ultimate goal of proper withholding is to pay so much each month that you neither owe nor are owed (e.g., refund), come Tax Day (Apr. 15 of each year).

What are some of the features of the new form?

The 2020 Form W-4, “Employee’s Withholding Certificate,” is very different from previous versions. Among the big changes to the form are new boxes for workers to check indicating they hold multiple jobs or are part of a two-earner household—simplifying the process on previous forms.  In addition, it requires employees to quickly calculate their annual tax payment amounts on the new W-4 Form to help educate or inform employees as to their income tax obligations.

Do I have to do anything right now?

No.  In the immediacy, no action is required.  This notice is informational only.  Your current tax withholdings will remain active on each paycheck until you wish to change them.

However, if or when you wish to change your withholding amounts, at that time you will be required to complete the new W-4 Form. 

Please note:  even though the IRS does not require you to complete the revised form, and even if your tax situation has not changed, the IRS recommends that you perform a “paycheck checkup” to see if you need to make adjustments to your current withholding.  To conduct the checkup, you can use the IRS’s Tax Withholding Estimator.  To effectively use the estimator, it is helpful to have a copy of your most recent pay stub and tax return.  It is likely that the estimator will be updated to account for the 2020 tax tables in early January.

The IRS has also published Frequently Asked Questions that you may find helpful as you complete the form.

We are happy to answer any questions you may have.  Please contact us at payroll@chapman.edu.