As you begin the new year, you’ll want to be sure that you update your W-4 to the 2020 version and familiarize yourself with the changes to the form. The new form is located here on the IRS’s website. The IRS recently released the final version of the 2020 Form W-4, renamed Employee’s Withholding Certificate. The IRS’s objective with the redesign of the form was to reduce the form’s complexity and make income tax withholding easier to navigate for employees.
Employers should have new employees hired on and after January 1, 2020 complete the 2020 Employee’s Withholding Certificate. Current employees who would like to adjust their withholding, now or later in the year, should also use the new form. Current employees who do not want to make any adjustments to their withholding at this time are not required to complete a new W-4; withholding should continue based on the most recently submitted W-4.
The new form is composed of 5 steps. Step 1 and Step 5 are the only steps required to be completed by the employee. Step 1 includes employee personal information, including name and filing status. Step 5 simply requires the employee to sign the form. An employee who is a non-resident alien should follow the same past procedure by utilizing the special instructions in Notice 1392 when completing the W-4.
The IRS also released Publication 15-T, Federal Income Tax Withholding Methods, with steps employers can take to determine the amount of federal income tax to withhold from new employee’s wages, using either the wage bracket method or the percentage method. The publication can be found here. Small employers may use the spreadsheet provided by the IRS for calculating the amount of income tax to withhold.