2020 FORM W-4 CHANGES
The 2020 Form W-4, Employee’s Withholding Certificate, is very different from previous versions. This is due to the federal tax law changes effective back in 2018. The Internal Revenue Service (IRS) is not requiring all employees to complete the revised form and has designed the withholding tables so that they will work with both the new and prior year forms. However, certain employees will be required to use the new form - those hired in 2020 and anyone who makes withholding changes during 2020.
Even though the IRS does not require all employees to complete the revised form, the IRS recommends individuals to perform a “paycheck checkup” to determine if changes to current withholding are necessary – even if there are no changes to individual tax situations. The IRS Tax Withholding Estimator is the recommended tool and individuals may find it helpful to have a copy of their most recent pay stub and tax return available for reference.
Please note: If you do not submit a new W-4 form, withholding will continue based on your previously submitted form.
If you determine that you need to change your withholding, please make necessary changes to your Form W-4 within ESTHER under Employee > Tax Forms. Before completing the 2020 Form W-4, please read the instructions included with the form. Individuals must complete Steps 1 and 5 as required by the IRS. Steps 2, 3, and 4 are optional, however, completing these steps will help ensure your federal income tax withholding more accurately matches your tax liability.
- Step 1 is for your personal information;
- Step 2 is for households with multiple jobs;
- Step 3 is used to claim tax credits for dependents;
- Step 4 is for other adjustments (additional income such as interest and dividends, itemized deductions that exceed the standard deduction, and additional tax you want withheld); and
- Step 5 is where you sign the form.
The IRS takes your privacy seriously and suggests that, if you are concerned about reporting income from multiple jobs in Step 2 or other income in Step 4(a), you may simply check the box in Step 2(c), which will divide the standard deduction equally between two jobs or enter an additional withholding amount in Step 4(c). The best option is to determine the additional withholding amount, using the withholding estimator and enter that amount in Step 4(c).
The IRS has also published Frequently Asked Questions that you may find helpful as you complete the form.
Please be advised that Rice’s payroll team cannot provide tax advice nor advise employees on tax withholdings. If you have any further questions about your withholding, please contact your tax advisor or refer to www.irs.gov.