The Internal Revenue Service (IRS) has released a revised Form W-4 for 2020. The IRS stated that the revised form is intended to simplify withholding and help employees make more accurate withholding decisions in the wake of tax changes made by the Tax Cuts and Jobs Act of 2017 (TCJA).
Employers must use the new Form for employees who are hired in 2020. Employees who were paid prior to January 1, 2020, need not submit a new Form unless they wish to adjust their withholding after this date.
Notably, due to the changes made by the TCJA, the revised Form no longer uses withholding allowances (withholding allowances were tied to the personal exemption amounts, which were eliminated by the TCJA). The 2020 Form also replaces complicated worksheets with more straightforward questions intended to promote more accurate withholding.
Employers should incorporate the revised Form W-4 in their payroll practices for 2020 and should also make sure their payroll vendors have done so as well.