The final version of the 2020 Form W-4 is expected to be issued by the IRS in the late Fall of 2019.
On August 8, the IRS posted the second draft 2020 Form W-4 (Employee’s Withholding Certificate) on its website. The IRS says it is providing this second version of the 2020 form now so that the programming of payroll systems can begin.
The 2020 Form W-4 has been highly anticipated by the payroll community due to the numerous changes being made to it as a result of the enactment of the Tax Cuts and Jobs Act in late-December 2017.
On May 31, the IRS issued the first draft 2020 Form W-4. This draft was significantly redesigned from the 2019 version of the form, now containing a series of five steps for employees to complete (if applicable).
The second draft 2020 Form W-4 changed the title of the form by removing the word “allowance.” The concept of withholding allowances is no longer being used, which was previously tied to the amount of the personal exemption. Due to changes in the law, personal exemptions are no longer a central feature of the tax code.
Some other small adjustments include changing the name of Step 2 from “Account for Multiple Jobs” to “Multiple Jobs or Spouse Works.” This step is for employees who hold multiple jobs at the same time or are married filing jointly and the employee and his/her spouse both work. The instructions note to consider checking the box in Step 2 if there are only two jobs in the household. The standard deduction and tax brackets will be divided equally between the two jobs.
There is also a change for claiming exempt from federal income tax withholding for 2020. On the first draft, employees claiming exempt would write the word in box 4(d) of Step 4 “Other Adjustments (optional).” The second draft removes box 4(d) and instructs employees claiming exempt to write the word in box 4(c) of Step 4.
The IRS explains that the computation of withholding has not changed from the first draft 2020 Form W-4. The IRS expects the final version 2020 Form W-4 to be issued in the late-Fall 2019. The IRS adds that although the final version will not be issued for a few months, there will be no further substantive changes.
Knowing that there will be no further substantive changes to the 2020 Form W-4 will give employers and payroll providers a little jump start to prepare their systems for the changes.
That said, the IRS is permitting comments on this second draft until September 9, which may be emailed to: WI.W4.Comments@IRS.gov.
Publication 15-T. The IRS expects the second draft of new Publication 15-T (Federal Income Tax Withholding Methods) to be issued in mid-August 2019. The first draft was issued in early-June 2019 and contains three sections to aid employers in determining federal income tax withholding. This second draft will expand on the first draft, including separate computations for figuring withholding for employees who file a 2020 Form W-4 in 2020 and for a 2019 or earlier Form W-4.