Starting in 2020, your newly hired employees will need to submit redesigned Form W-4s. According to the IRS, the new design replaces complicated worksheets with more straightforward questions. The forms, coupled with the agency’s new Tax Withholding Estimator, are designed to help taxpayers get closer to their correct withholding each year.
New employees and those wanting to adjust their withholdings will now need to use the updated Form W-4 to do so. The latest version is available here. While the form is simplified, it’s also very different from the previous version, so prepare for a learning curve. For instance, allowances are no longer used. Plus, the new form places emphasis on accounting for multiple jobs—either for an individual with more than one job or a married couple who both work—whereas the previous form, according to the IRS, “accounted for multiple jobs using detailed instructions and worksheets that many employees may have overlooked.”
New and current employees alike may want to do a “paycheck checkup” to determine whether their withholding are accurate. The new Tax Withholding Estimator was designed to do just that. The IRS recommends taxpayers in the following situations use the calculator to start 2020 on the right foot:
- Those who expect to work only part of the year (but not if you are only switching jobs).
- Those who had a large balance due or refund last year.
- Those who have dividend or capital gain income or are subject to additional taxes, such as the extra Medicare tax.
- Those with self-employment income.
- Those who prefer the most accurate withholding for multiple job situations.
- Those who prefer to limit the information provided in Steps 2-4 of the new form but do not want to sacrifice accuracy.