On December 5, 2019, the IRS released an updated version of W-4 form (2020). As you may know, the Form W-4 is used to determine each employee’s federal tax withholdings.
Form W-4 (2020) aligns the Tax Cuts and Jobs Act which affected individuals for the first time during the last tax year. Allowances are no longer used for the redesigned Form W-4. This change is meant to increase transparency, simplicity, and accuracy of the form. In the past, the value of a withholding allowance was tied to the amount of the personal exemption. Due to changes in the law, currently you cannot claim personal exemptions or dependency exemptions.
Are all employees required to furnish a new Form W-4? No. Employees who have furnished Form W-4 in any year before 2020 are not required to furnish a new form merely because of the redesign. Employers will continue to compute withholdings based on the information from the employee’s most recently furnished Form W-4. However, employers should make available the revised Form W-4 (2020) for all new hires and employees who wish to amend their withholding declaration.
