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Like past years, the IRS released changes to the income tax withholding tables for 2020. In addition to new wage brackets, there are significant changes to how employers will handle tax withholding. These changes are in response to the Tax Cuts and Jobs Act of 2017.
Like past years, the IRS released changes to the income tax withholding tables for 2020. In addition to new wage brackets, there are significant changes to how employers will handle tax withholding. These changes are in response to the Tax Cuts and Jobs Act of 2017.
IRS Issues 2020 Form W-4. On December 5, the IRS issued the redesigned 2020 Form W-4 (Employee's Withholding Certificate). The new form no longer uses withholding allowances. Instead, there is a five-step process and new Publication 15-T (Federal Income Tax Withholding Methods) for determining employee withholding.
Most workers aren't required to file a new W-4 form with their employer in 2020but you might want to anyway. However, if you start a new job after 2019, you'll have to complete a new W-4 form.
Starting in 2020, income tax withholding is no longer based on an employee's marital status and withholding allowances, tied to the value of the personal exemption. In addition, workers can choose to have itemized deductions, the Child Tax Credit and other tax benefits reflected in their withholding for the year.
The IRS allows you to claim allowances on your W-4. Consequently, the more allowances you claim, the less federal income tax you pay. The less you claim, the higher your tax withholding. Claiming exempt on the W-4 form also results in no federal income tax withholding.
The more allowances an employee claimed, the less you would withhold in federal income tax. But, employees can no longer claim allowances on the 2020 version of Form W-4. Employees hired before 2020 do not need to fill out a new form. You can withhold income taxes using withholding allowances for these employees.
Changing Your W-4. If you submitted a new W-4 to your employer, the changes could cause your tax withholding to go up. For example, each personal allowance you claim on the form lowers your income subject to withholding. So, if you had a child leave the nest, that's one less allowance.
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