2020 W-4 Form Guidance
Guidance on the 2020 Form W-4, Employee’s Withholding Certificate
Existing employees are NOT required to fill out and submit a new Form W-4 at the beginning of each year. They would only do so if they required a change to their withholding, adjusting for status changes and/or a change in tax situation; additional dependents, other income, etc. A prior year form will still be valid, unless the employer receives a new one from an employee. A new 2019 W-4 should not be accepted going forward. Employees who do fill out a new W-4, are no longer given the option to choose a number of “Allowances”, for adjusting the amount of Federal Income Tax withheld from their paychecks.
Step 1: Personal information – The employee should fill out Name, Address, and Social Security number and place a checkmark beside his or her status. If no status is chosen, or the form is simply not returned, the employer must assume the default withholding rule of Single status, with no other adjustments.
Steps 2 through 4 on the new form now take the place of claiming Allowances. This will require some additional calculating on the employee’s part to complete these steps.
Step 2: Multiple jobs or working spouse – If the employee places a checkmark in the box in step 2C, this will increase the amount of withholding in the employee’s paycheck.
Step 3: Dependents – If the employee places an amount in Box 3, this is an ANNUAL REDUCTION in the total amount of withholding.
Step 4(a): Other income (not from jobs) – If the employee places an amount in this box, this will increase the amount of wages subject to income tax withholding. This is an ANNUAL number provided by the employee.
Step 4(b): Deductions – If the employee places an amount in this box, this will decrease the amount of wages subject to income tax withholding. This is an ANNUAL number provided by the employee.
Step 4(c): Extra withholding – An entry into this box by the employee, means they wish to have this additional amount withheld for EACH PAY PERIOD.
**Although there is no dedicated space for an EXEMPT employee’s notation of Status, it is acceptable for the employee to write “EXEMPT” in the space below Step 4(c), above Step 5. (Publication 15-T, page 3)
Step 5 – This step requires the form to be signed and dated by the employee. If the 2020 W-4 is submitted back to the employer without this step completed, the form is not valid.
Most software programs have updated, or will be updating, their employee setup/tax sections to accommodate changes to the new W-4, with spaces for each box on the form. Depending on your software of choice, it may hold the information from a 2019 (or older) W-4, to use in payroll calculations until your employee requests a change and wishes to use the new 2020 Form W-4.
A best practice by the employer might be to suggest to any employees who do fill out a 2020 W-4, that they might compare their federal withholding from their last paystub in 2019 to the first one in 2020, and make any adjustments they feel necessary from there.