The IRS has updated the Form W-4 for 2020. Supposedly this change simplifies the Form W-4 by removing some irrelevant steps.
However, as with any IRS tax form, the 2020 Form W-4 is still very complicated. Accurately filling out and filing the W-4 can be difficult.
Let’s talk about how it has changed, and the best ways to file it.
Who needs Form W-4
The Form W-4 is used by employees to report tax information to their employers. This information can include things filing status, dependents, income, deductions, and more. Employers use this information to withhold the correct amount of tax from their employee’s paychecks.
It is most often used when an employee is first hired onto a new company. However, existing employees also use Form W-4 to report changes in information to their employers.
What’s new on the 2020 Form W-4
The new 2020 Form W-4 is now called the “Employee’s Withholding Certificate”. This is significant because they have entirely removed the personal allowance worksheet. The new 2020 Form W-4 is structured as follows:
Step 1: Personal information
Step 2: Income information from you and your spouse
Step 3: Claim your dependents
Step 4: Other income you want to record
Step 5: Employee’s signature
The final step of filing the 2020 Form W-4
It is almost always easier for both employees and employers to file Form W-4 electronically. Especially if you are using an e-filing solution like TaxBandits that offers simple, step-by-step instructions.
With TaxBandits, you can email an electronic version of the 2020 Form W-4 to all your employees so they can fill out it and send it back electronically to you. There’s no paper involved and TaxBandits is extremely affordable.