2020 W-4 Form: Understanding What’s New & Addressing FAQs

The Employee’s Withholding Allowance Certificate, or W-4 Form, tells payroll processors how many allowances an employee is claiming, and how much money is deducted from their paychecks. If you’re hiring any new employees or changing an employee’s status, you need to know the current updates for the 2020 W-4 Form in order to comply with today’s standards. 

Why has the W-4 From Been Updated?

The main reasons that the IRS made updates to the W-4 Form in 2020 were to make the form easier to complete, improve its privacy, and ensure submitted information is accurate. Some of the ways they accomplished this include:

• Changes in marital status declarations – Single or Married Filing Separately, Married Filing Jointly, and Head of Household are the three categories
• Improved privacy for workers that hold multiple jobs and want to keep all their income information confidential from each employer
• Additional information about completing the form, with website links and W-4 questions
• Updated withholding tables to calculate withholding amounts

While older submissions are still valid, employees hired after January 1, 2020, should use the 2020 form. By making it easier for employees to calculate the correct withholding amounts, it will result in quicker filings and fewer checks for employee processors and IRS professionals.

What Does the New 2020 W-4 Form Look Like?

This new 2020 W-4 Form looks significantly different than past forms, mostly due to changes by the Tax Cuts and Jobs Act (TCJA) that were introduced in 2018, which include tax rates, deductions and withholding calculations. Some examples of the new changes are:

• There is no longer a list of number of exemptions, but instead, there are several questions to better determine an employee’s tax liability
• Personal information needed includes legal name, social security number, address and tax filing status
• Employees have the option of not claiming dependents
• Additional adjustments such as retirement income, deductions and extra tax withholdings can be determined using the online IRS withholding calculator
• Employee signatures are required at the end to confirm completion

Since the form looks different, employees will likely have questions about how to complete it properly and accurately. If employees are seeking general tax or legal advice, or how to further understand the 2020 W-4 Form, encourage them to use the free IRS tools online or reach out to a tax advisor.

Employer FAQs for 2020 W-4 Forms

Due to the revisions made to the 2020 W-4 Forms, employers may have to deal with new challenges, such as reprogramming of payroll systems and ongoing support of two distinct withholding systems. To help understand the implications of these changes, here are a few commonly asked questions.

When Will Access Be Granted to Employers for the 2020 W-4 Form?

The final 2020 W-4 Form and its instructions were made available in late November 2019.

Are Employers Required to Distribute the New 2020 W-4 Form to Current Employees?

Employers are not required to distribute the new 2020 W-4 Forms to current employees but may do so in order to create awareness. Employers are required to provide the form to employees hired after 2019.

Are Two Payroll Systems Needed: For the Old Withholdings and the new Ones?

Employers should be prepared to calculate federal tax withholdings and allowances based on the new W-4 Form inputs, as well as forms prior to 2020.

Is it Allowable for an Employee to Not File or Return their W-4 Form?

At a minimum, employers are required to solicit W-4 Forms annually for three years to avoid possible penalties.

Are Employers Required to Have Completed Paper Forms on File?

If an employee completes a paper version of the W-4 Form, employers are required to keep it as part of their tax records.

What Liabilities do Errors Carry for the Employer?

Employers are required to calculate withholdings in accordance with the formulas and instructions outlined in the 2020 W-4 Forms. As a result, they may be held liable for errors.

How Should Seasonal or Temporary Employees Fill Out the New 2020 W-4 Form?

Employees whose income can vary greatly from pay period to pay period should simply follow the instructions associated with the 2020 W-4 Form.

Paypro Solutions for Complex Management Systems

With 27 years of operational experience, our team at Paypro has experience dealing with payroll, time and attendance, employee benefits and management issues. We solve inefficiencies in complex environments, provide end-to-end workforce management solutions, identify unique restrictions, and work with you to customize smooth processes for your business.

About the Author

Kayla is the Marketing Manager at Paypro Corporation overseeing all inbound and outbound marketing and sales efforts. She has 7+ years of experience working within the B2B and SaaS based solutions space and thrives on creating messaging and campaigns that introduce products and services to those who need them most.