IRS Unveils Draft W-4 for 2020
On May 30, 2019, IRS issued a draft W-4 for the 2020 tax year. This is IRS’ second attempt to unveil a restructured W-4 in light of changes made by the Tax Cuts and Jobs Act. The last attempt, in June of 2018, was met with general disapproval over the amount of personal information taxpayers would be encouraged to disclose to their employers. IRS ultimately withdrew the draft and issued a 2019 W-4 that was much the same as the 2018 form.
IRS says that the draft 2020 form is designed to increase the “transparency and the accuracy of the withholding system.” It provides more discrete disclosure options for taxpayers with second jobs, spouses who work, and additional income from investments and non-wage activities. Rather than request all of this information on the face of the form (as the 2018 draft form did), this form includes worksheets for additional withholding calculations. Taxpayers can report their investment income on the form if they want the withholding information automatically calculated. The form encourages taxpayers to calculate their most accurate withholding by using the withholding calculator at www.irs.gov/W4App.
Once a new 2020 W-4 is finalized, employers will be required to use it for new hires in 2020. Employers can also request that their other employees complete the new form as well, but IRS says that they cannot require them to.
In conjunction with the release of the form, IRS also issued a set of FAQs regarding the new design.
IRS is accepting comments about the new draft form W-4 through July 1, 2019. They should be submitted to WI.W4.Comments@IRS.gov.
We will be watching for a final form to be released. It is expected later this summer.
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