Big Changes to Form W-4
Form W-4 (Employee’s Withholding Certificate) went through extensive changes for the year beginning January 1, 2020. Please take a few minutes to review the following information and instructions for this form.
Form W-4 should be filled out by each new employee to inform the employer how much federal income tax to withheld from their wages. A new Form W-4 should also be filled out by employees that expect significant changes in their household income or that would like to change their tax refund/liability at the end of the year.
The new Form W-4 is divided in 5 steps, with step 1 (personal information) and 5 (signature) being mandatory for everyone. Steps 2 – 4 will help you more accurately estimate your withholdings to match your tax liability at the end of the year.
Step 2 – 4 are for individuals with multiple jobs and for married couples where both spouses have income. You can either use the worksheet attached to Form W-4 to estimate your withholding or for a more accurate withholding amount you can use the online IRS estimator at www.irs.gov/W4App. To use the estimator, you will need recent paychecks (for you and your spouse) for each of your jobs, a copy of your prior year tax return, and projected 2020 income from all sources.
The estimator will ask for information on unearned income (interest and dividends), dependents and deductions. After answering all the questions, the estimator will inform you what your tax liability or refund will be at the end of the year with your current withholdings. If you would like to change that refund or liability, you can adjust it with the slider at the top of the page. Once you are happy with the results you can print the pre-filled Form W-4’s (with the correct withholding amount) right from the page.
For more information you can visit: https://www.irs.gov/newsroom/faqs-on-the-2020-form-w-4
Very important note: One may look at Steps 4a and 4b as being an invasion into your personal life. Instead of having to tell your employer about your earnings and deductions outside of employment, it may be in your best interest to use the IRS calculator so you don’t have to complete items 4a and 4b.