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IRS has updated the Form W-4 for 2020. Know how to fill out w4 Form and changes in the new Form W-4.
- Updated on Feb 08, 2023 - 11:00 AM by 123PayStubs Team
When hiring an employee, the employer will have the employee complete the IRS Form W-4. This form is used to determine the federal income tax amount to withhold from the employee paycheck every pay period.
Here is a list of topics covered in this article.
Form W-4, Employee's Withholding Certificate is used to determine how much Federal Income Tax that an employer can withhold from the employee's Paycheck.
Employees must complete Form W-4 and send it to the employer. The withholding information is subject to review by the IRS.
Form W-4 must be completed by the employee whenever he or she changes their job or any life-changing events occur like marriage, divorce, or the birth of a child happens, or they are starting a new job or second job.
Sometimes employees may find the withholding amount is too less or too high for the previous year when preparing their annual income tax return. In such cases, they must complete Form W-4 to change the withholding amount.
Calculate employee withholdings based on both 2019 and 2020 Form W-4 easily and issue pay stubs with accurate tax calculations using 123PayStubs. Get your first pay stub for free!
With the new 2020 Form W-4, the IRS is trying to reduce the complexity in the Form and to increase the transparency and accuracy of the withholding system
The earlier version of Form W-4 titled "Employee’s Withholding Allowance Certificate", is now "Employee’s Withholding Certificate".
One significant change that the IRS has brought in is that now employees can't use Form W-4 to claim the withholding allowance. What this change brings is that employees can claim only for the dependent or use the deduction worksheet to reduce the taxes withheld, whereas with the earlier version of Form W-4 allowed employees to claim more allowance to lower the taxes withheld.
The Tax Cuts and Jobs Act eliminates personal exemptions too. The worksheet for calculating the personal exemptions is removed in the updated version of Form W-4. However, the IRS retained worksheets such as Multiple Job and Deduction in the 2020 Form W-4.
Employees who have already submitted their Form W-4 might not be required to complete the new 2020 Form W-4 unless there is a life-changing event like marriage, divorce, or the birth of a child happens, or they are starting a new job.
The employee may now claim exemption from withholding for 2020 if they meet the following conditions:
It’s simple. Fill out the New 2020 W-4 Form in 5 simple steps. Complete Step 2, 3, and 4 only if they apply to you. Otherwise, skip these steps.
Calculate employee federal income taxes easily and accurately by providing a few basic details using 123PayStubs. Generate professional pay stubs for employees with accurate tax calculations.
