If you have employees starting a new job this year or employees that need to adjust their income tax withheld from their paycheck, they will be needing a new Form W-4. Curious what this new form looks like? Click here to view the new form. You do not need to require existing employees to fill out the new form. The change in the Form W-4 stemmed from the changes made to the federal tax code from the Tax Cuts and Job Acts which took effect in 2019.

Employees who have furnished Form W-4 in any year before 2020 are not required to furnish a new form merely because of the redesign. You can continue to compute withholding based on the information from the employee’s most recently furnished Form W-4. Any employee wishing to use the new Form W-4 may do so at any time, but they cannot go back to a prior version. All new employees hired after December 31st, 2019 must use the new form.  Any employee wishing to adjust their withholding must use the redesigned form.

According to the IRS the new design reduces the form’s complexity and increases the transparency and accuracy of the withholding system. While it uses the same underlying information as the old design, it replaces complicated worksheets with more straightforward questions that make accurate withholding easier for employees.

Withholding allowances are no longer used for the redesigned Form W-4. This change is meant to increase transparency, simplicity, and accuracy of the form. In the past, the value of a withholding allowance was tied to the amount of the personal exemption. Due to changes in law, currently you cannot claim personal exemptions or dependency exemptions.

New employees first paid after 2019 who fail to furnish a Form W-4 will be treated as a single filer with no other adjustments. This means that a single filer’s standard deduction with no other entries will be taken into account in determining withholding. This treatment also generally applies to employees who previously worked for you who were rehired in 2020 and did not furnish a new Form W-4.

You may ask employees paid before 2020 to furnish the new redesigned version, but as part of the request you should explain that:

• they are not required to furnish a new Form W-4, and 
• if they do not furnish a new Form W-4, withholding will continue based on a valid form previously furnished.

For those employees who furnished forms before 2020 and who do not furnish a new one after 2019, you must continue to withhold based on the forms previously furnished. You are not permitted to treat employees as failing to furnish Forms W-4, if they don’t furnish a new Form W-4. Note that special rules apply to Forms W-4 claiming exemption from withholding.

The IRS will provide instructions in the 2020 Publication 15-T, Federal Income Tax Withholding Methods, on the additional amounts that should be added to wages to determine withholding for nonresident aliens. Additionally, nonresident alien employees should continue to follow the special instructions in Notice 1392 when completing their Forms W-4. The new 2020 Form W-4 can be used now with respect to wages to be paid in 2020.