The Internal Revenue Service (IRS) has released a new version of the Federal Form W-4 for 2020. One of the most significant changes is the removal of withholding allowances. These changes are largely in response to the 2017 Tax Cuts and Jobs Act.
Tax Withholding Estimator for your W-4
The IRS encourages everyone to use their IRS Tax Withholding Estimator tool in 2020. This estimator will help you perform a quick “paycheck checkup,” to determine whether you have the right amount of tax being withheld from each paycheck or may need to make updates to your Form W-4 withholding elections.
You may keep your current Federal Form W-4 elections in effect as the IRS is not requiring you to modify your withholdings. However, it is important to note that if you do intend to make any changes, you will be required to complete the new 2020 Form W-4 and adhere to the new Form W-4 requirements.
All employees currently claiming "Exempt" from federal tax withholding must complete a new 2020 Form W-4 by no later than Feb. 15, 2020 to maintain exempt status. Failure to complete a new Form W-4 by this time will result in a new default tax withholding status of "Single" with no adjustments.