The IRS has announced substantial improvements to the IRS Form W-4, Employee’s Withholding Certificate, for 2020. These changes will have a significant impact on employees and employers, but do not worry, we’re here to help you get through it.
If you are an employee
The new form and revised withholding calculations could affect your tax withholding and year-end refund or tax due amounts when you file your annual income tax return. The form is designed to be both easier and more accurate, permitting easy adjustments for anticipated tax credits, other income, and deductions. If you would like to adjust your withholding to account for these factors, you will now be able to simply enter your full-year estimated amounts on the Form W-4.
Form W-4 Highlights
- There are three options for employees with multiple jobs or two-earner families:
- Simplified worksheet in the W-4 instructions
- Enhanced IRS online Withholding Estimator
- New checkbox to automatically adjust for multiple jobs or two-earner families
- New filing status — Head of Household
- New adjustment entries:
- Full-year child and dependent tax credits
- Full-year other income; and,
- Full-year deductions
In addition, you will still be able to authorize an additional dollar amount to withhold from each pay period, for any reason.
If you are an employer
Understanding these changes and being able to communicate them to your employees is crucial, not to mention required to keep you compliant. That’s why we’re passing along a comprehensive IRS 2020 Form W-4 Employer Toolkit, courtesy of our partners at ADP. The toolkit is loaded with important information, like:
- An employer guide designed to help you understand and prepare for the changes.
- Instructions for complying with new 2020 withholding calculations and procedures.
- Frequently asked questions for you and your employees.
- Legislative updates and blog articles about the changes and their impact on employers.
- Webcasts loaded with information about the change and prepping for year end.
In addition, the IRS provides an Income Tax Withholding Assistant spreadsheet to help small employers calculate the amount of federal income tax to withhold from their employees’ wages.
There’s no time to waste, as these changes will affect your first filings in 2020.
Have questions? We’re here to help! Contact your PWB advisor at 763-550-1100 or reach out to Derek Dittmer, our dedicated representative, at ADP Payroll and HR Solutions for more information and preferred partner pricing: 320-309-2180 firstname.lastname@example.org