Understanding 2020 W-4 Form

- Updated on May 07, 2020 - 11:00 AM by 123PayStubs Team

When hiring an employee, the employer will have the employee complete the IRS Form W-4. The form will have information on the amount to withhold from the employee paycheck.

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What is Form W-4?

Form W-4, Employee's Withholding Certificate is used to determine how much Federal Income Tax that an employer can withhold from the employee's Paycheck.

Who must complete Form W-4?

Employees must complete Form W-4 and send it to the employer. The withholding information is subject to review by the IRS.

When must Form W-4 be completed?

Form W-4 must be completed by the employee whenever he or she changes their job or any life-changing events like marriage, divorce, or the birth of a child happens, or they are starting a new job or second job.

Sometimes employees may find the withholding amount is too less or too high for the previous year when preparing their annual income tax return. In such cases, they must complete Form W-4 to change the withholding amount.

Why has the Form W-4 been changed for 2020?

With the new 2020 Form W-4, IRS is trying to reduce the complexity in the Form and to increase the transparency and accuracy of the withholding system.

What are the changes in Form W-4 for 2020?

No More Withholding Allowance

The earlier version of Form W-4 titled "Employee’s Withholding Allowance Certificate", is now "Employee’s Withholding Certificate".
One significant change that the IRS has brought in is that now employees can't use Form W-4 to claim the withholding allowance. What this change brings is that employees can claim only for the dependent or use the deduction worksheet to reduce the taxes withheld, whereas with the earlier version of Form W-4 allowed employees to claim more allowance to lower the taxes withheld.

No More Personal Allowance Worksheet

The Tax Cuts and Jobs Act eliminates personal exemptions too. The worksheet for calculating the personal exemptions is removed in the updated version of Form W-4. However, the IRS retained worksheets such as Multiple Job and Deduction in the 2020 Form W-4.

Not all Employees are not required to complete the updated version of Form W-4

Employees who have already submitted their Form W-4 might not be required to complete the new 2020 Form W-4 unless there is a life-changing event like marriage, divorce, or the birth of a child happens, or they are starting a new job.

Exemption from Withholding

The employee may now claim exemption from withholding for 2020 if they meet the following conditions:
Had no federal income tax liability in 2019 Expecting to have no federal income tax liability in 2020

How to fill out the new 2020 W-4 Form?

It’s simple. Fill out the New 2020 W-4 Form in 5 simple steps. Complete Step 2, 3, and 4 only if they apply to you. Otherwise, skip these steps.

  • It’s simple. Fill out the New 2020 W-4 Form in 5 simple steps. Complete Step 2, 3, and 4 only if they apply to you. Otherwise, skip these steps.
  • Enter the job information if you have more than one job at a time or married filing jointly, and your spouse works.
  • Claim Dependent details such as the amount of the child tax credit and the credit for the dependents that you can claim when you file the tax return.
  • Other adjustment details such as the total of estimated income and deductions for the year and additional withhold amounts if any.
  • Finally, Sign the Form.

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