January 2020 has brought about a plethora of employment-related legislative changes, some leaving employers more confused than others. Next on the list of complicated adjustments is new tax paperwork from the Internal Revenue Service (IRS).
After the Tax Cuts and Jobs Act (TCJA) was passed at the end of 2017, The IRS released new income-tax withholding tables and an updated Form W-4. The 2018 form reflected the TCJA changes, as well as a couple of other items designed to help employees determine whether or not their withholdings were correct following the tax rate changes. Employers were instructed to inform their workers about the updated 2018 Form W-4, but many workers neglected to update their information, leading to some public outpouring of disappointment last year when the 2018 taxes were filed.
The IRS has once again updated their criteria with a new 2020 version of Form W-4. The new form is designed to better reflect the changes made by the TCJA, aims to improve the accuracy of withholdings and simplify the process of filling out the form. The new Form W-4, also called “Employee’s Withholding Certificate” is filled out in five steps:
- Enter Personal Information
- Multiple Jobs or Spouse Works
- Claim Dependents
- (Optional) Other Adjustments
- Sign Here
The IRS is not requiring all employees to complete the revised form and has designed the withholding tables so that they will work with both the new and prior year forms. For current workers, withholding will continue based on their previously submitted form. However, workers hired in 2020 and workers that make withholding changes at any time during the 2020 fiscal year will be required to use the new form. Workers that aren’t sure if they are withholding the correct amount from their paychecks can use the updated Tax Withholding Estimator from the IRS.
For more information, please download Emplicity’s free 2020 Form W-4 FAQ sheet here.
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Since 1995, Emplicity has provided a smarter, more secure, and integrated platform of employer services to its 300 business clients and their 8,500 employees. As a Professional Employer Organization, or PEO, the California-based HR outsourcing firm simplifies the compliance, administration, and support businesses need in the areas of employee benefits, payroll, and human resources technology.
NOTICE: Emplicity provides HR advice and recommendations. Information provided by Emplicity is not intended as a substitute for employment law counsel. At no time will Emplicity have the authority or right to make decisions on behalf of its clients.