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February 2020: A New Year, a New Form W-4

Business Insurance

 

A New Year, a New Form W-4

The IRS released an updated version of its Form W-4, also known as the “Employee’s Withholding Certificate.”

Employers use IRS Form W-4 to determine each employee’s federal tax withholdings. The new form is intended to harmonize tax withholding declarations with the Tax Cuts and Jobs Act, which affected individuals for the first time during the last tax filing season.

Employees may complete a new W-4 each year or each time they experience a change in their personal financial situation. However, the new form does not invalidate prior versions, and employers are not expected to replace W-4 forms from previous years with the 2020 version.

Highlights of the New Form

  • The new form will prompt employees to declare whether they have multiple sources of income (e.g., two jobs or two-earner households).
  • New employees who fail to submit a Form W-4 after 2019 will be treated as single filers with no other adjustments.
  • The new form uses a five-step process. Only steps one and five are mandatory.

Employer Takeaway
Employers should become familiar with the updates to IRS Form W-4 and make it available for all new hires and employees who wish to amend their withholding declarations in 2020. Please note that employers are not required to update W-4 forms that were completed and filed on or before 2019.

 

Additional articles from the February 2020 edition of the Univest Employee Benefits Newsletter:

  1. Cadillac Tax and Other Key ACA Taxes Repealed
  2. 5 Must-Do's for Employee Orientation
  3. How to Conduct 1-on-1 Benefits Meetings

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