New W-4 Released: APA Offers Resources

The final version of the new Form W-4 has been published and the IRS is asking professionals to become familiar with it so you can determine proper withholding in 2020.

IRS says the new form lets taxpayers more accurately estimate the amount of tax they have withheld from their paychecks. The goal of the new design is to balance simplicity, accuracy and privacy for employees, while minimizing burden for employers and payroll processors.

The American Payroll Association (APA) has weighed in on the new form, saying it predicts “employers will receive many questions on the new form, which may overwhelm some businesses. The APA recommends that businesses should review the new form and proactively communicate with employees about the new Form W-4, using resources created by the IRS and APA.”

The APA also recommends employers use these tools:

Sample letter – The APA drafted a sample letter outlining key changes to Form W-4. Your clients can freely customize and share this letter with employees. The letter provides an explanation of why the form has changed, recommends that employees perform a “paycheck checkup” using the IRS’s Tax Withholding Estimator, and provides basic information about the new steps employees will take to complete the form.

Frequently Asked Questions – The IRS released a set of FAQs in August to accompany the final draft version of the 2020 Form W-4. It provides easy-to-understand replies to a variety of questions that will apply to the final form, including “What happened to withholding allowances?” and “Are all employees required to submit a new Form W-4?”

Changes Overview and Resources for Employers – The APA has developed a resource for employers to better understand the new changes to Form W-4 and how they impact their employees. The web page also provides sample communications that employers can distribute to employees and explanations of the changes to the form to help employers better prepare for employee questions.

Withholding Estimator Tool – Many employees will not need to submit a 2020 Form W-4. It is recommended, however, that they double-check their withholdings even if there has not been a dramatic change to their tax situation. When communicating about the new form with employees, employers should direct employees to the IRS’s Tax Withholding Estimator, which will enable them to determine if any adjustments are needed to their current withholding.

Later this month, the IRS plans to release Publication 15-T, Federal Income Tax Withholding Methods, for use with the new 2020 Form W-4, which will provide employer steps to figure federal withholding.

By the end of the month, new federal tax options will be made available for use in all of BenefitMall's payroll applications to support the new form. More specific product information will be communicated as the features are made available. 

Additional Resources

2020 Form W-4, Employee’s Withholding Certificate (pdf)

About Form W-4 on IRS.gov