The IRS Releases an Early Draft of the 2020 IRS Form W-4, Employee’s Withholding Allowance Certificate
The IRS has just released an early draft of the 2020 Form W-4, although it is anticipated that changes could be made prior to its final release. The most glaring change is the concept of allowances is removed, no doubt due to the fact that personal exemptions no longer exist (the Tax Cuts and Jobs Act which became applicable for 2018 onward eliminated exemptions).
The primary purpose of the design, according to the IRS, is to reduce the complexity of the form and to increase the accuracy and transparency of the withholding system.
According to the FAQs on the early release of the 2020 Form W-4 provided by the IRS, “Allowances are no longer used for the redesigned Form W-4 to increase transparency, simplicity, and accuracy. In the past, the value of a withholding allowance was tied to the amount of the personal exemption. Due to changes in law, currently you cannot claim personal exemptions or dependency exemptions.”
It is worth mentioning that all employees are not required to submit a new W-4. If an employee has previously submitted a W-4 in any year prior to 2020, there is no need to complete a new form because of the redesign. Employers will calculate withholding based on the employees most recently submitted Form W-4.
As a reminder, if you owed taxes for 2018 consider updating your Form W-4 to increase withholdings.Back To List