If you watch TV commercials, you may have noticed a lot of recent ads promoting payroll tax refunds available to employers through the Employee Retention…
Late in December, the IRS issued a new Form W-4, which can be found on the IRS website by clicking here.
You’re probably already familiar with the W-4 as the form your new hires complete to designate the amount of federal tax withholding that shows up on their paychecks. The new Form W-4 is intended to be simpler and more accurate.
While you’re required to provide the 2020 version of the Form W-4 to new employees, your existing employees don’t need to complete a new form unless they want to. Employers can continue to withhold based on forms your employees furnished prior to 2020. But if an employee wants to update their withholding, they’ll need to use the new form.
The new W-4 is divided into 5 steps. Employees are required to complete only step 1 (personal information) and step 5 (signature). Steps 2-4 only need to be completed if they’re applicable, but doing so will increase the accuracy of the employee’s withholding. If an employee only completes steps 1 and 5, their withholding will be based on the standard deduction and tax rates for their filing status (single, married, etc.) without any adjustments. Employees who want to receive a refund will need to enter an additional withholding amount in step 4(c).
Employees who hold down more than one job can account for those in step 2. However, some employees may not want to disclose additional jobs to their current employer, so the IRS recommends using the Tax Withholding Estimator to determine any additional amount to be added in step 4(c).
FAQs for the new form can be found on the IRS website by clicking here.