Hello New 2020 Federal W-4
As promised, the IRS released the final version of the new Federal W-4 form for use starting in 2020. Recall that a W-4 is a form filled out by an employee to tell the employer how much to withhold from each paycheck. As a quick overview, there are 5 steps to the new Federal W-4 Form.
Step 1 – basic demographic information, including filing status. Note there is an addition of head of household status instead of just married or single.
Step 2-4 are optional.
Step 5 – need to sign and date.
Steps 1 and 5 are the only required sections. Below is some basic info on the optional middle sections:
Step 2 – this is for married people where both spouses work or people with multiple jobs who want to get ‘closer’ to the correct withholding to minimize refunds or additional payments. Read the instructions carefully when filling out this section.
Step 3 – instead of putting number of withholding allowances, you have to do the math and enter a dollar amount for your dependents. If no children or ‘other dependents’ skip this step
Step 4 –this step is only if you have significant other income,(e.g. self-employment on the side) or other deductions. This is also, where you would go if you wanted to specify an extra dollar amount to withhold from each check.
You do NOT have to fill out a new form if you already have one on file with your employer but if you change jobs or wish to adjust your withholdings, you will need to use the new form. Either way, it is never a bad idea to review your withholdings. The W-4 form does ultimately affect your overall tax bill.