2020 Form W-4, Employee’s Withholding Certificate
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Form W-4, Employee’s Withholding Certificate, is an IRS Form which helps the employer to determine how much tax to withhold from each employee's paycheck.
Here's what are the changes in 2020, and how to fill out the Form W-4.
In this article, we cover the following topics:
What are the changes in 2020 Form W-4?
IRS redesigned the Form W-4 for 2020 that reflects the changes in the tax law, Tax Cuts and Jobs Act, which took effect in 2018.
No more withholding allowances
The previous version of Form W-4’s title was “Employee’s Withholding Allowance Certificate.”
The redesigned Form W-4 for 2020 no longer calculates “allowances,” so the title has been updated to “Employee’s Withholding Certificate.”
The biggest change is that the employees can't use the W-4 form to claim withholding "allowances".
- In the previous versions of Form W-4, employees can claim more allowance to lower the amount of federal income tax withheld from their wages.
- In the current version, employees can claim only for dependents or use the deductions worksheet to lower the amount of taxes withheld.
No more personal allowance worksheet
Since the exemptions were tied to allowances, the Tax Cuts and Jobs Act eliminates the personal exemptions too. So, the worksheet for calculating personal exemptions is removed from the 2020 W-4 Form.
Currently, IRS retained the two worksheets such as Multiple Jobs Worksheet and Deductions worksheet in 2020 Form W-4.
All employees don't need to submit a New Form
Employees newly hired in 2020 must fill in the redesigned Form W-4. Also, employees who had any major life changing events marriage or had kids must fill out a new Form W-4. Employees who have already submitted Form W-4 need not required to fill new W-4 Form. Check with the information required section to complete 2020 Form W-4.
Claim exemption from withholding
Employees may claim exemption from withholding for 2020 if they meet both of the following conditions:
- Employees who had no federal income tax liability in 2019
- Employees who expect to have no federal income tax liability in 2020
How to fill out 2020 Form W-4?
There are 5 steps to be filled in Form W-4. Below are the steps involved:
Step 1- Employee Personal Information
Step 1 must be completed by all employees.
- 1. Enter name and address
- 2. SSN of employees
3. Enter filing status if filing as
- i. single or married;
- ii. separately or jointly; or
- iii. Head of household
If an employee miss to choose the option in Step 1(c), employers are required to calculate their withholding as “Single”.
Step 2- Multiple jobs or Spouse works
Employees should complete this step if having more than one job or if an employee file jointly with a spouse who also works.
An employee can calculate this by either using the IRS Tax Withholding Estimator or by using the Multiple Jobs Worksheet.
If an employee dealing with two jobs that have same pay for both the job, he/she can simply check the box on Line C of this section.
Step 3- Claim dependents
If an employee completes Step 2 of Form W-4, he/she must also complete Step 3 for only one of the jobs from Step 2.
Step 3 of 2020 Form W-4 helps you determine if an employee qualifies for the child tax credit and the credit for other dependents, which an employee may be able to claim while filing individual tax returns.
Click here to know more about the conditions for qualifying child tax credit. If an employee qualifies for the child tax credit, less tax would be withheld from the qualified paycheck.
Step 4- Other adjustments (Optional)
Employees have to complete this step if having any other additional requirements when considering withholding:
- 1. Other income (not from jobs)
- 2. Deductions (other than the standard deductions like mortgage interest and charitable contributions)
- 3. Extra withholding (If an employee would like to withhold any additional withholding for the pay period)
Step 5- Signing the Form
If an employee not signing the Form, the Form is considered invalid. After completing all the steps, send the completed Form W-4 to the employer.
For more details, visit irs.gov.
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