The 2020 Form W-4, Employee’s Withholding Certificate, is very different from previous versions. This is due to the federal tax law changes that took place in 2018. The Internal Revenue Service (IRS) is not requiring all employees to complete the revised form, but employees hired in 2020 and anyone who makes withholding changes during 2020 will be required to use the new form.
The new W-4 design is intended to achieve greater accuracy of withholding with a new five-step process:
- Step 1: Your personal information (Required)
- Step 2: Households with multiple jobs
- Step 3: Used to claim tax credits for dependents
- Step 4:Other adjustments (additional income such as interest and dividends, itemized deductions that exceed the standard deduction and extra tax you want withheld)
- Step 5: Your signature (Required)
Steps 2, 3, and 4 are optional, but completing them will help ensure that your federal income tax withholding more accurately matches your tax liability.
Even though the IRS does not require all employees to complete the revised form and even if your tax situation has not changed, we recommend you perform a “paycheck checkup” to see if you need to make adjustments to your current withholding. To conduct the checkup, you can use the IRS’s Tax Withholding Estimator.
To effectively use the estimator, it is helpful to have a copy of your most recent pay stub and tax return. If you do not submit a new form, withholding will continue based on your previously submitted form.
The IRS has also published Frequently Asked Questions that you may find helpful as you complete the form.