Form W4 2020 Anticipated Roll Out

 

Be In the Know! On May 31, 2019, the IRS released a draft of the Newly revised 2020 W4 form; this new and revised form incorporates changes brought about by the 2017 Tax Cuts and Jobs Act.

~by:   Jaime Maltese, HR Assistant
jaime@mccloskeypartners.com

 

One major modification is that employees can no longer chose the number of withholding allowances, which, in the past, had been tied to the personal exemption amount. The IRS stated that “due to changes in the law, personal exemptions are currently not a central feature of the tax code”.  Another significant change is that those complex worksheets once attached to the W4 are now replaced with clear-cut questions.

Chuck Rettig, the IRS Commissioner remarked, “the primary goals of the new design are to provide simplicity, accuracy and privacy for employees while minimizing burden for employers and payroll processors”. Essentially the new form increases the likelihood that employees will have the right amount of taxes taken out of their paychecks, thereby decreasing the likelihood of a refund or taxes owed.

The new Form W4 is now a 5-step process. There are two steps that are required for all employees (entering personal information and signing the form), and 3 additional steps that may or may not apply. These include accounting for multiple jobs in a household, claiming dependents, and making “other” adjustments related to retirement income, deductions other than the standard, additional income withheld from each pay period, and exemption from tax withholding.

Some employees may not want their employers to know if they work multiple jobs or have investments. Others may have more complicated tax situations.  Fortunately, the revised form makes it easy to keep this information private. Employees are directed to use a calculator available at www.irs.gov/W4app and just enter the additional amount they want withheld from each paycheck in section 4c on the new W4.

The IRS has made it clear that this form is not yet ready for use, and employers should continue using the current W4 for new employees or those wishing to make changes. A critical reminder: because of the changes to the tax code, many employees did not receive a refund for tax year 2018 as they have in the past, or owed the IRS for the first time. Employers should continue to encourage their employees to check their withholdings for 2019 and adjust them as needed, particularly if they’ve experienced a major life change such as birth or marriage. Employees can use the Paycheck Checkup tool on the IRS website.

The IRS is accepting feedback about the 2020 Form W4 through July 1. A near-final draft as well as employer instructions are expected to be released in mid-late July and the final version is anticipated for November. It is important to note that once it is released, employees who have already submitted a W4 will not be required to resubmit simply because of the new design. Payroll processors will continue to use the employee’s most recent W4 to calculate tax withholdings.

Beginning in 2020, however, all newly hired employees are required to use the revised form as well as those who want to make adjustments to their withholding.

Check back with McCloskey Partners, LLC as you head into Q4 2019 for developments on the new W4. 

 

To learn more about McCloskey Partners, LLC please visit our website at www.mccloskeypartners.com or contact Jaime Maltese today at jaime@mccloskeypartners.com or 1-888-246-6970 x700.

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