IRS Releases Draft of New W-4
Recently, the IRS unveiled a draft of the 2020 Form W-4. After collecting feedback and implementing changes from the Tax Cuts and Jobs Act, this new design is intended to make accurate withholding easier for employees starting next year. The IRS has also released some answers to frequently asked questions like:
1. Why redesign Form W-4? The new design reduces the form's complexity and increases the transparency and accuracy of the withholding system. While it uses the same underlying information as the old design, it replaces complicated worksheets with more straightforward questions that make accurate withholding easier for employees.
2. What happened to withholding allowances? Allowances are no longer used for the redesigned Form W-4 to increase transparency, simplicity, and accuracy. In the past, the value of a withholding allowance was tied to the amount of the personal exemption. Due to changes in law, currently you cannot claim personal exemptions or dependency exemptions.
3. Are all employees required to submit a new Form W-4? No. Employees who have submitted Form W-4 in any year before 2020 are not required to submit a new form merely because of the redesign. Employers will continue to compute withholding based on the information from the employee's most recently submitted Form W-4.
Click here for more information. Remember, this is just a draft and the IRS expects to release an updated version mid-to-late July and the final form in November.
Posted on Thu, June 13, 2019
by The Paytime Team