New Federal W-4 Forms | Implications for Employers and Payroll Systems

Since the Tax Cuts and Jobs Act of 2017 (TCJA) suspended all personal and dependent exemptions, the proposed Form W-4 no longer features a line for entering a number of allowances. Previously, this figure was based on calculations from the Personal Allowance Worksheet.  The first page is now much more extensive and detailed, with new sections asking for specific withholding-related information.  Implications for Employers

  • Employers may, but are not required to, distribute the 2020 Form W-4 to existing employees Employers must furnish the 2020 Form W-4 to newly hired employees after 2019.
  • Employers should be prepared to calculate federal tax withholding based on 2019 and prior Forms W-4 (i.e., allowances) as well as the 2020 Form W-4 inputs for the foreseeable future.

Implications for Payroll Systems

  • Payroll systems will need to accommodate the existing withholding allowance calculation, as well as the new method, which could make reprogramming more difficult.

The Internal Revenue Service (IRS) has published a draft of the form including additional guidance and a FAQ page.  You can access this information by clicking on the following links:

Click Here for IRS FAQs on The 2020 W-4 Form

While the IRS has not updated its FAQ guidance page (as it still refers to the draft form), the recommendations included are helpful in using the final W-4. 

Click Here for The 2020 W-4 Form

EANE Members are encouraged to view a 60-minute pre-recorded webinar “Preparing for the New Federal W-4.” The webinar is available in the Member-Only Webinar Library.