Understanding 2020 W-4 Form

- Updated on Feb 08, 2023 - 11:00 AM by 123PayStubs Team

When hiring an employee, the employer will have the employee complete the IRS Form W-4. This form is used to determine the federal income tax amount to withhold from the employee paycheck every pay period.

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 occur 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.

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

With the new 2020 Form W-4, the 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.

  • Personal information: Enter the personal information and choose the filing status as single or married filing separately, Married filing jointly, or Head of household.
  • Multiple jobs or spouse works: This step needs to be completed only if the employee has more than one job at a time or the employee’s filing status is married filing jointly and the spouse also works. Employees only need to complete any of the options: (a) Withholding estimator, (b) Multiple jobs worksheet, or (c) If the employee has only 2 jobs in total with almost the same pay.
  • Dependent details: 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 adjustments: Other adjustment details such as other income (not from job), itemized deductions, and any extra withholding.
  • Sign Form: Sign the form and submit it to the employer.

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