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New Form W-4 for 2020

Bryan Little, Farm Employers Labor Service

January 6, 2020

On December 5, 2019, the Internal Revenue Service (IRS) released the final 2020 Form W-4, Employee’s Withholding Certificate.  Newly-hired employees in 2020 will be required to file a new version of IRS Form W-4, Employee’s Withholding Allowance Certificate. The form includes major revisions compared with the previous form, including new input elements for federal income tax withholding calculations, which may require significant reprogramming of payroll systems, and ongoing employer support of two distinct withholding systems (i.e., based on the new input elements discussed below, as well as ongoing support for the withholding allowances-based system).

Current employees will not be required to complete a new Form W-4 for 2020. Employers will still rely on existing Forms W-4, including withholding allowances claimed, for employees that don’t complete a new form. However, for employees hired after 2019 ― and for existing employees who want to adjust their withholding after 2019 ― the 2020 version will be the only valid Form W-4.

Employees have long used the IRS Form W-4 to establish marital status and a number of withholding allowances to adjust their federal income tax withholding to match their anticipated full-year income tax liability.

However, the Tax Cuts and Jobs Act (TCJA) made significant changes to tax rates, deductions, tax credits and withholding calculations, beginning in 2018. The IRS released new withholding tables for 2018 and 2019, but the Form W-4 remained largely unchanged, continuing to feature an entry for the number of withholding allowances. Prior to the TCJA, most withholding allowances were based on personal exemptions (i.e., one each for the employee, any spouse and dependents), yet the TCJA had changed the value of personal exemptions to zero.

You can find more information from the Internal Revenue Service (IRS) at this link: “About Form W-4, Employee Withholding Certificate.”  National payroll services provider ADP also provides extensive information to aid employers with implementing the new Form W-4 at “IRS 2020 Form W-4 Employer Guide.”