When the IRS announced it was changing Form W-4, required of anyone whose employer withholds a federal tax from their paycheck, naturally a lot of people wondered why. As it turns out, the IRS aren’t trying to complicate things, they’re simply streamlining the information required.
Since these changes were announced, we’ve gotten a lot of questions and decided to tackle them head on. Let’s take a look at some of the most common things we’ve been asked:
1. What’s up with the IRS changing Form W-4?
This is the kind of change we can all get behind. The new design is intended to reduce the W-4’s complexity and increase the accuracy of any withholdings. While using the same general information, it replaces complicated worksheets with straightforward questions, allowing more accurate withholdings for employees.
2. Did the IRS decide to eliminate withholding allowances?
Going forward, the IRS will no longer account for allowances with the redesigned Form W-4. This change is intended to increase the overall transparency, simplicity and accuracy of the W-4. Previously, the withholding allowance was tied to the total exemption.
3. Is every employee required to provide the new W-4?
Not exactly. Any employee who previously provided a W-4 prior to 2020 doesn’t have to provide a new form. Employers will continue to compute withholdings based on the original W-4.
4. Do I have to complete all of the steps?
No. The W-4 is divided into 5 basic steps and the only steps required are Step 1, which is simply your personal information, such as your name and filing status, and Step 5, your signature. That’s it!
If we didn’t answer your questions here, don’t worry! To help support our sister-product TaxBandits, PayWow will be covering more detailed questions we’ve been asked over the next few weeks.