Major changes are coming with the 2020 federal form W-4, the Employee’s Withholding Allowance Certificate. The changes will affect both employers and employees.
Form changes are being made to more accurately reflect the Tax Cuts and Jobs Act, which took effect January 1, 2018 and modified the tax laws, according to information from the U.S. Department of the Treasury.
The Treasury Department and the Internal Revenue Service are working together to redesign the form. The IRS is expected to release an early draft of the form by May 31, 2019.
Major changes were deferred by one year
The new W-4 was originally to be released for 2019, but it was delayed after much input from the professional payroll and tax communities. The changes would have required employers to support two separate tax withholding procedures. Delaying the launch will allow input and gives companies time to update their systems.
The draft W-4 will be open for public comment, allowing suggestions to be considered. The IRS plans to issue a second draft this summer followed by a final version later in the calendar year.
The IRS encourages employees to review their tax withholding situation to avoid having too little or too much withheld from paychecks. The IRS has an online tool to do this.
BCN Services is following these changes as they happen and will communicate any important updates that affect employees. Please contact our office or call 800-891-9911 with any questions.
