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Draft Form W-4 released for 2020

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Tax Hot Topics newsletterThe The IRS released a draft Form W-4 for 2020 and related FAQs implementing changes to employment tax withholding after the Tax Cuts and Jobs Act (TCJA) repealed the personal exemption for individuals.

The draft Form W-4 no longer uses withholding allowances to determine employment tax withholding on wages. Instead, it provides straightforward questions regarding an individual’s employment status, dependents and optional withholding adjustments. The new draft Form W-4 also significantly reduces the number of underlying worksheets used to complete the Form W-4. However, taxpayers who work multiple jobs concurrently are strongly encouraged to use the IRS’s withholding calculator to determine the most accurate withholding for purposes of filling out Form W-4.

Comments for the draft Form W-4 are due by July 1, 2019. A draft of the final version of the Form W-4 is expected to be released early to mid-July to give employers and payroll providers time to transition to the new form before the final version becomes effective on Jan. 1, 2020. Employees hired after 2019 will be required to use the new Form W-4. However, employees hired before 2020 must continue to use the current Form W-4 that follows the withholding allowance approach for determining withholding. To facilitate the transition, the same set of IRS withholding tables will be used for current Forms W-4 and the new Form W-4 effective in 2020.

Contacts:
Jeff Martin
Partner
Washington National Tax Office
T +1 202 521 1526

Keith Mong
Managing Director
Washington National Tax Office
T +1 202 521 1554

James Sanchez
Senior Associate
Washington National Tax Office
T +1 202 861 4107

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