The 2020 Form W-4, Employee’s Withholding Certificate, is very different from previous versions. This is due to the federal tax law changes that took place in 2018 from the 2017 Tax Cuts and Jobs Act. Check out my prior article with a bit of history and nostalgia of a 30 year old form. https://blog.paymaster.com/here-it-comes-2020-w4-form/
The most significant change is that there is no longer the use of withholding allowances, and the form asks the employee to basically prepare an estimated tax return. Some of the information requested may even be considered intrusive, including income from other sources, spouse income, itemized deductions, and number of children and other dependents. The end result, according to the IRS will be a more accurate federal income tax withholding throughout the year. This means that those used to receiving a large refund at year end may not find that being the case with the use of the new form. Not necessarily a bad thing as one would have more money on their net check each payroll during the year.
All employees hired on or after January 1st, 2020 will need to complete the new form. During 2020, the IRS will provide tax withholding tables for both the “old form” method of allowances and the new expanded form. This means that employees hired prior to January 1st, 2020 are not required to complete a new form unless they want to change their withholding. By January 1st, 2021, all employees will need to have completed a new form.
No different than prior years, the employer does not need to send a copy of this form to the IRS. The IRS states that the employer must maintain their copy for a minimum of four years after the date that the taxes were due or paid, whichever is later. Since this form is not actually used to report taxes due or paid, my translation of this requirement is to keep the form for as long as the form is used for calculation of withholding tax and for four years after the W-2 is filed for that year based on the W-2 filing date to Social Security Administration (SSA).
We have made two guides, one for employers and one for employees to assist with guidance and instructions;