New Form W-4 Q&A
Effective January 1 all employers should have switched over to the IRS’s new Form W-4. The new form has been redesigned in order to reduce the form’s complexity and increase accuracy. The implementation of the new form has caused a lot of questions from both employers and employees. Here are a few of the common asked questions and answers as outlined by the IRS (a complete listing of frequency asked questions can be found on the IRS website at https://www.irs.gov/newsroom/faqs-on-the-2020-form-w-4).
- What steps of the form do I have to complete?
- The form is divided into 5 steps. An employee is only required to complete two of the steps, step 1 and 5. In step 1 the employee will provide their personal information and their filing status. In step 5 they will sign the form. Steps 2-4 are only completed if they apply.
- What happens if I only complete steps 1 and 5?
- The amount of your withholding will be calculated based on your filing status’s (as completed in step 1) standard deduction and tax rate. No additional withholdings will apply.
- If I want a refund when I file my tax return,
how do I complete the form?
- The new form is designed to more accurately withhold taxes from your pay. Therefore, if you want to withhold more than the standard deduction and taxes from each paycheck you will need to put a dollar amount in Step 4(c). You will then receive these monies back when you file your taxes.
- I have multiple jobs. How do I complete step 2?
- Step 2 allows you to choose one of three options:
- Step 2(a): Use the Tax Withholding Estimator (www.irs.gov/W4app) to determine the amount of withholding you will place in Step 4(c). To complete the estimator, you will need to know the approximate amount of pay for each job you have. If your pay changes significantly at an of your jobs, you may have to complete a new Form W4.
- Step 2(b): Use the Multiple Jobs Worksheet on page 3 of the form to determine the amount of withholding you will place in Step 4(c). To complete the worksheet, you will need to know the approximate amount of pay for each job you have. If your pay changes significantly at any of your jobs, you may have to complete a new Form W4. If you (and your spouse) have a total of two jobs and the pay at the higher paying job is more than double the pay at the lower paying job, it is advised by the IRS to use this method.
- Step 2(c): If you (and your spouse) have a total of two jobs with similar pay it is advised by the IRS to use this method. To use this option, you should complete a Form W-4 for each job with the box in Step 2(c) checked. The standard deduction and taxes will be divided evenly between the two jobs to calculate the withholdings. You will not need to furnish a new Form W-4 to account for pay changes at either job.
- Do I need to have all my current staff complete
a new Form W-4?
- No. Only staff hired on or after January 1, 2020 must complete the new form.
- If a staff member hired prior to 2020 wants to
update their Form W-4 in 2020 which form do we use?
- Any staff making changes to their withholdings after January 1, 2020 must use the new form.
- May I ask all my staff to complete a new Form W-4
no matter when they started?
- Yes, you can ask staff to complete a new Form W-4, but you can not make it required. If the staff does not complete a new form their withholdings will be based on the most recent valid form completed.
To obtain the form and for other helpful information the IRS has set up a page for the new form, https://www.irs.gov/forms-pubs/about-form-w-4.
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