2020 W-4 Form Changes Explained

There is a lot going on with the new W-4 form even though many people may only write in their name and check their tax filing status (Single, Married, Head of Household). The biggest changes are there are now two different tax withholding tables one at a lower rate and one at a higher rate.  The withholding is now based upon your expected annual income and not how many personal exemptions you have.  The personal exemptions have been removed from the tax code. 

The purpose of the new form is to determine if the worker has additional income, multiple jobs, child tax credits or itemized deductions that may either increase or decrease their expected tax liability. If none of these apply, just fill in section 1 and sign the form

If someone has two or more jobs or is married and their spouse works, they can either: use the multiple job worksheet on pages 3 and 4, use the IRS withholding calculator at www.irs.gov/W4App, or check the box in 2c to use the higher withholding rates.

Step 1:  Personal Information: Name, address, SSN and tax filing status.

Step 2:  Multiple Jobs.  Anyone that has two or more jobs or are married and their spouse also works can use the worksheet (2b) on page 3 of the form or they can check the box 2c.

Step 3:  Dependent Credits: Will account for credits for qualifying children or other dependents.  Completing this will decrease what is taken out of your check for taxes. 

Step 4:   Additional Adjustments (Income or Deductions)

(4a) Additional Income. If you have additional income (not from jobs) such as interest, dividends or retirement income, enter the annual amount of this income and you will have additional tax withheld.

(4b) Itemized Deductions.  If you can still itemize deductions for home   mortgage, interest, charitable contributions, medical expenses or state and local taxes you can complete the Deduction Worksheet on page 3 of the W-4 Form and enter that number on line 4b.  This will lower your tax withholding amounts. 

  (4c) Extra Withholding or Exempt Filing.

If someone wants extra taken out, write that amount in Box 4c.

If someone wants to claim EXEMPT, write EXEMPT in Box 4c and no federal taxes  will be withheld. 

The 2020 W-4 form is available at: https://www.irs.gov/pub/irs-prior/fw4–2020.pdf

For help to determine your most accurate withholding use the IRS Withholding Calculator at www.irs.gov/W4App