If you are an employee, it is important you understand the new Form W4s available to you for withholding calculations. The IRS and states (Idaho, Oregon) have modified the forms with the intent your withholding is as accurate as possible.
Who needs to complete the new 2020 IRS Form W4?
Any employee who changes federal withholding or any new employee
So, current employees are not required to complete the new 2020 IRS Form W4 (if no changes are desired)?
Correct. The old form can still be utilized in these cases.
Please note: the withholding elections on the prior form may not align with the new tax laws, risking under-withholding. Everyone’s situation is different.
Multiple jobs – Step 2 on the new 2020 IRS Form W4
If you have more than one job OR are married and you and your spouse each work, please pay close attention to Step 2, “Multiple Jobs” section.
The intent of this section is to calculate an additional amount to withhold, so you do not under-withhold during the year. This is not new; the old form had a section to calculate this as well.
!! The additional withholding is done on only ONE of the jobs, not all the jobs. The IRS recommends the withholding be on the highest-paying job for the most accuracy.
If you complete a new W4 for one job, the IRS recommends the new W4 for all jobs, for accuracy.
Claim Dependents – Step 3 on the new 2020 IRS Form W4
!! If there are multiple jobs (at a time): complete this section for only ONE of the jobs, again, the IRS recommends the highest-paying job.
(Why: if there are two jobs in the family, and Step 3 is completed for each job, the child tax credits will be calculated for each job. Example: you have four children, equaling a $8,000 tax credit; if both you and your spouse complete Step 3, you will have adjusted for a $16,000 credit).
!! If you have a child that you don’t always claim (example: divorced, you claim in odd years), be careful – only complete this section for the year if you are claiming your child or you will be under-withheld. Similar example as to the above.
Example 1: John is single with one job, no other income. John will complete Step 1 and Step 5.
Example 2: David and Suzy are married, file Married Filing Jointly, each have one job, and have two children. John has the highest paying job. John will complete Steps 1,2,3 and 5 on the W4. Suzy would then complete Steps 1 and 5. She would not complete Steps 2 and 3, because John has taken those Steps into account for the both.
The State Form W4
If you haven’t updated your State W4 recently, it is highly recommended you do so, as withholding tables and the forms have changed.
If you are changing withholding or are a new employee, you are required to complete the most recent W4 for the state.
Please see our Links tab to access all the above forms.