APA Participates in IRS 2020 Form W-4 Webinar

APA participated in an IRS webinar, “Understanding the 2020 Form W-4 and How to Use It to Compute Withholding,” in October, in which about 11,000 payroll and tax professionals attended. During the webinar, presenters explained the form and draft employer instructions under IRS Publication 15-T, Federal Income Tax Withholding Methods. APA’s focus was on the form (see also APA’s Compliance Hot Topics, 2020 Form W-4).

Form W-4 Steps

The presenters explained the draft 2020 Form W-4 is divided into five steps:

Step 1 is for personal information including the employee’s name, address, and filing status.

Step 2 is for multiple jobs and includes three options. Option 1 in Step 2(a) is selected to use the IRS’s tax withholding estimator. Option 2 in Step 2(b) is to use the Multiple Jobs Worksheet on page 3 of the form. Option 3 (Step 2(c)) is to check the box to identify that there are two jobs in the household.

Step 3 allows employees to claim dependents. Employees can also claim other credits here, such as for education. The Step 3 credits will directly offset the amount of withholding.

Step 4 allows employees to make other adjustments to their withholding for additional income (investment and retirement income), deductions, and extra withholding. Employees should not use this step for job-related income.

Step 5 is a must-complete section in which an employee signs and dates the form to declare under penalties of perjury that the form to the best of the employee’s knowledge is accurate.

Key 2020 Form W-4 Considerations

Here are some key considerations regarding the 2020 Form W-4:

• An employer may ask current employees to complete a 2020 Form W-4 but should explain that they are not required to provide a new form.
• Employees hired in 2020 and employees with changes to their withholding in 2020 must use the new form.
• If an employee only completes Steps 1 and 5, withholding is based on filing status with no other adjustments.
• If an employee does not complete a new form, employers must continue withholding based on a valid form previously submitted. For employees hired after 2019 who do not complete a 2020 Form W-4, employers must withhold based on a filing status of single with no other adjustments.