Effective January 1, 2020 a new Federal Form W-4, Employee’s Withholding Allowance Certificate, will be required
What is changing?
The updated Form and associated withholding tables have been completely redesigned due to the 2017 Tax Cuts and Jobs Act mandates. Improvements to the form are intended to increase the transparency and accuracy of employee withholding by taking into account spousal income, multiple jobs, and non-employee income (investments, rental income, retirement income, etc.). Other Form changes include new inputs used for calculating federal income tax withholding and no longer allowing employees to claim any number of personal or dependent allowances.
The IRS is not requiring all employees to complete the revised Form and has designed the withholding tables so that they will work with both the new and prior year forms.
So, who will be required to fill out the new form?
- Employees hired on, or after, January 1, 2020
- Any Employee who makes changes to their withholding elections at any time in 2020 or later
- Any Employee who has never previously provided you with a Federal Form W-4
What happens if my employee does not fill out the new form?
Existing Employees withholding will continue based on their previously submitted W-4.
Employees hired on or after January 1, 2020, who do not provide you with the new 2020 Form W-4, will need to be withheld at the highest single tax rate.
Where can I obtain additional information regarding the new form?
See the new 2020 Form W-4: 2020 Form W-4
Additional information and answers to common questions about the new form are available at: Form W-4 Overview
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Please contact your tax professional for advice.