Smart Benefits: New W-4 Coming in 2020

Monday, December 02, 2019

Rob Calise, GoLocalWorcester Business/Health Expert

Rob Calise

A near-final “early draft” of the Form W-4, Employee’s Withholding Certificate for 2020, was recently released by the Internal Revenue Service (IRS), with the final version expected shortly.

Designed to be more straightforward than the old design, it should be used for employees hired after 2019 and current employees who wish to adjust their withholding after 2019.

Changes for 2020

Despite new withholding tables being released for 2018 and 2019 after the significant changes to tax rates, deductions, tax credits, and withholding calculations with the Tax Cuts and Jobs Act (TCJA), Form W-4 was not changed much.

This new 2020 W-4 Form includes changes that reduce complexity and increase the transparency and accuracy of the withholding system. Some of these changes include:

Removal of the total number of allowances line
Addition of new input elements for Federal Income Tax withholding calculations
Removal of complicated worksheets
Addition of straightforward questions to make it easier for employees to make accurate withholding choices
Addition of a separate tax table for employees who would like the option of a higher withholding. This new table is intended to make it easier to adjust withholding for two-earner households

Next Steps for Employers

Payroll departments may want to inform their Human Resources departments and others who are involved in the hiring process.
Remember that current employees can leave their 2019 W-4 forms or prior forms unchanged indefinitely.
You may want to inform your employees that if they wish to make changes after 2019, they will be required to use the new 2020 version of Form W-4.

More Information

For more guidance on this topic, the IRS has published an FAQ with answers to employer questions on the new 2020 Form W-4 here.

Rob Calise is the Managing Director, Employee Benefits of The Hilb Group of New England, where he helps clients control the costs of employee benefits by focusing on consumer-driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate of Bryant University with a BS in Finance