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IRS Releases New Tax Withholding Estimator
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The new Form W-4 includes changes that can affect employees’ refunds or the amount of tax they owe. For example, income tax withholding is no longer based on the employee’s marital status and withholding allowances, and employees can opt to have tax benefits like itemized deductions and the Child Tax Credit reflected in their withholding.
Employees can use the Tax Withholding Estimator to determine if they want to make adjustments to their withholding and receive specific recommendations for doing so on the new Form W-4.
You can learn more about the enhancements to the Tax Withholding Estimator in this IRS news release.
Key Takeaways for Employers
- You are required to obtain a 2020 Form W-4 for any employees hired during 2020.
- You may continue to rely on an existing Form W-4 for employees hired prior to January 1, 2020. However, those employees may benefit from filing a new Form W-4 completed after using the new Tax Withholding Estimator.
- Consider encouraging your employees to use the Tax Withholding Estimator to assess their withholding and file a 2020 Form W-4 to make adjustments.
Please contact us with any questions about this or other tax issues affecting your organization. We’re here to help!
