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Questions about the 2020 W4

Who is required to complete a 2020 W4?
  • Required for all new employees completing a Federal W-4 form on or after Jan. 1, 2020.
  • Employees needing to update their exempt status for 2020
  • Existing employees are not required to complete a new form
 How do I update my W4?
You can update your W4 via the employee dashboard W-4 Employee's Withholding Allowance Certificate. 
What is “New” with the 2020 W4?
  • Withholding allowances are no longer used
  • New form provides options for more accurate tax withholding
  • New form is divided into 5 steps:
  • Step 1 (personal information and filing status) and Step 5 (signature) are required
  • Steps 2 - 4 may be used to establish a more accurate tax withholding
How do I claim Exempt on the new W4?

To claim ‘Exempt’ from withholding, individual should write ‘Exempt’ in the space below Step 4(c) and complete steps 1 and 5

What are steps 2-4?

Steps 2, 4a, and 4c if completed, will increase Federal tax withholding; completing Step 3 or 4b will decrease Federal tax withholding

Why would I consider increasing Federal tax withholding?
    • if you hold more than one job at a time or both you and your spouse have jobs (Step 2)
    • If you have income from sources other than a job that is not subject to withholding (Step 4a)
Why would I consider decreasing Federal tax withholding?
  • If you are eligible for income tax credits such as the child or other dependent tax credit (Step 3)
  • If you are eligible for deductions other than the standard deduction (Step 4b)
What do the options in Step 2 determine?
  • Per the IRS, Step 2 allows the employee to choose one of three different options for more accurate withholding, which include tradeoffs between accuracy, privacy and ease of use:
  • Option 1 (Step 2a): Most accurate/private option – Use the Tax Withholding Estimator at www.irs.gov/W4app and enter additional amount on line 4c .
    • Allows employee to identify the extra withholding amount to enter on line 4c without revealing additional jobs/income information to their employer
  • Option 2 (Step 2b): Uses Worksheet 1 on page 3 of the W-4 form to provide roughly accurate withholding without use of the online Tax Withholding Estimator – calculates additional amount to be entered on line 4c.
    • Note: If either option 1 or 2 are used and the pay changes for any of the jobs used in the calculation a new W-4 will need to be completed to have accurate withholding
  • Option 3 (Step 2c): Easiest option – check box if only 2 jobs are held in household.
    • Least accurate and may result in overwithholding but generally will not result in underwithholding
    • Reveals to the employer that multiple jobs exist in the household
Why should I consider using the Tax Withholding Estimator?
 
  •    Individuals may consider using the estimator in the following scenarios:
    • Expect to work only part of the year
    • Have dividend, capital gain, or self-employment income or are subject to additional taxes
    • Prefer most accurate withholding for a multiple job situation
    • Prefer to limit information provided in steps 2 - 4 on the Form W-4 but do not want to sacrifice accuracy
How do I update my W4?
 You can update your W4 via the employee dashboard W-4 Employee's Withholding Allowance Certificate. 
What is the NRA Indicator on the employee dashbaord, W-4 Form?
NRA stands for Nonresident Alien - If you are a nonresident alien, see notice 1392, supplemental Form W-4 Instructions for Nonresident Aliens, before completing the W4. https://www.irs.gov/pub/irs-pdf/n1392.pdf