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The W-4 Gets a Makeover after 30+ Years

Dana Spinello, CPA
by Dana Spinello, CPA on December 19, 2019


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The last major redesign of the Form W-4 occurred in 1987 – over 30 years ago.  When updates became necessary due to changes from the Tax Cuts and Jobs Act of 2017, the I.R.S. used the opportunity to overhaul the form and address ongoing concerns about its complexity and inaccurate withholding results.

Despite the positive intent of the redesign, The American Payroll Association has predicted that explaining the new form to workers may be challenging. The new W-4 form, 2020 Employee’s Withholding Certificate, becomes mandatory for newly hired employees on January 1, 2020 so it’s important that employers prepare to discuss the changes.

Changes to the new W-4 that employers need to know

The new W-4 form has been streamlined and updated to reflect recent changes to the tax code. Details have been added that allow workers to better match their withholding amount to their actual tax liability – minimizing unwelcome surprises at tax time. And, procedures have been put in place to protect employee privacy.

       Changes include:

  • The complicated worksheets of past versions have been replaced with five straightforward steps. Depending on the situation, only two steps may be required – personal information and signature.
  • To align with the elimination of personal and dependency exemptions in the tax code, allowances have been removed from the form.
  • Employees will find filing statuses that match those listed on tax returns instead of the limited options of the past.
  • Resembling a mini-tax return, the form now aims to account for all income such as second jobs, spousal jobs, and other income sources. Employees also enter information about child tax credits and itemized deductions. This provides a broader, more accurate financial picture.
  • To protect employee privacy, the I.R.S. will also provide an online Tax Withholding Estimator, allowing workers to pre-calculate withholding amounts and reduce disclosures on the form which are visible to employers.

New employees and those updating their withholding amounts after December 31, 2019 are required to use the new W-4 form, but existing employees and rehires may also benefit from a “paycheck checkup.” By using the online estimator, they can determine whether an adjustment to their withholding amount is appropriate and file a new W-4 form, if necessary.

For additional information, review the FAQs provided by the I.R.S.

Dana Spinello, CPA
Dana Spinello, CPA

Dana is the Director of Tax & Unemployment at FrankCrum. Dana has been with FrankCrum since 2010 and oversees tax compliance and unemployment benefit administration. She has been a Certified Public Accountant since 2002. She first realized her aptitude with accounting when she chose to play with her mother’s adult learning accounting class material at age seven. When she’s not working, Dana enjoys traveling, true crime, and reading historical novels.