As a result of changes from the Tax Cuts and Jobs Act of 2017, the Internal Revenue Service recently released a new version of Form W-4.
The new W-4 will need to be completed only by new hires or those who wish to submit tax changes. Otherwise, current withholdings will continue based on the information from the employee’s W-4 record on file in the Payroll system.
The IRS and U.S. Treasury Department updated the tax tables so individuals’ tax withholdings more closely match their tax liability. The new tax tables were released by the IRS in late December, and all employee pay checks in calendar year 2020 will be based upon the updated tables.
Individuals are encouraged to use the IRS Tax Withholding Estimator to estimate their tax withholdings for 2020. The new W-4 allows individuals to withhold an additional fixed amount from their paychecks, if desired. The IRS recommends having a recent pay stub and tax return when using the Tax Withholding Estimator.
Individuals seeking to update their tax withholdings are encouraged to discuss with a tax advisor. The IRS has also published Frequently Asked Questions that may be helpful to review in anticipation of this change.