The Form W-4 for 2020 and after has been redesigned so that employees will no longer be able to request adjustments to their withholding using withholding allowances.

The employee uses the redesigned Form W-4 to provide the employer with amounts to increase or reduce withholding, and amounts to increase or decrease the income that is subject to withholding. Employees will provide the employer with information on their anticipated filing status; the amount of the child tax credit and the credit for other dependents that the employee might be able to claim; whether they hold more than one job at a time or (for joint filers) whether their spouse works; dollar amounts to increase or reduce withholding; and dollar amounts to increase or decrease the income that is subject to withholding.

Employees hired before 2020 are not required to submit a new Form W-4 merely because of the redesign, but they must use the redesigned form if they wish to adjust their withholding. Employees hired after 2019 must use the redesigned form. An employee hired after 2019 who fail to submit a Form W-4 will be treated as a single filer with no other adjustments; the employer will determine withholding by taking into account a single filer’s standard deduction with no other entries. It is anticipated that IRS Pub, 15-T will include withholding tables and other guidance that will allow employers to determine withholding regardless of whether the employee has provided a Form W-4 in an earlier year or a new Form W-4 in 2020.

An employee who certifies to the employer that he or she had no income tax liability for the preceding tax year and anticipates none for the current tax year may be exempt from wage withholding. An employee claiming exemption from withholding for a tax year must give the employer a new Form W-4 by February 15 each year to continue the exemption.

A $500 civil penalty may be assessed against any individual who decreases his or her withholding by claiming allowances on Form W-4 without a reasonable basis. In addition, a criminal penalty may be imposed against any individual who willfully supplies false or fraudulent withholding information, or willfully fails to supply information that would increase the amount withheld.

Most Forms W-4 are retained by the employer and only need to be submitted to the IRS if directed to do so. The IRS may issue a notice to the employer that specifies the maximum withholding allowance a particular employee may claim. The employer is generally bound by this determination until otherwise advised by the IRS.

 

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