Some employees will only fill out steps 1 and 5; others will also fill out steps 2, 3, or 4 if they want to adjust their withholding calculations if they have multiple jobs; the spouse works; they have dependents; they have other income from interest, dividends, or retirement income; or they want to increase withholding.
What happens under the new payroll withholding calculations if employees do or don’t submit a 2020 W-4 or later?
- A new employee who fails to furnish a 2020 or later Form W-4 will be treated as if they had checked the box for Single or Married filing separately in Step 1(c) and made no entries in Step 2, 3, or 4 of Form W-4.
- An employee who was paid wages before 2020 and who failed to furnish a Form W-4 for 2020 should continue to be treated as single and claiming 0 allowances per a 2019 or earlier W-4.
- If the employee does not want the single and claiming 0 allowances from a 2019 or earlier W-4, he/she must fill out a 2020 or later Form W-4 and indicate at a minimum the preferred marital status by completing Step 1 and signing in Step 5. Steps 2, 3, and/or 4 are only relevant to employees who want to adjust their withholding calculations as mentioned earlier.
Per IRS, consider using the online estimator to figure your federal income tax withholding more accurately at www.irs.gov/W4App if you:
- Expect to work only part of the year;
- Have dividend or capital gain income, or are subject to additional taxes, such as the additional Medicare tax;
- Have self-employment income in addition to wages;
- Prefer the most accurate withholding for multiple job situations; or
- Prefer to limit information provided in Steps 2 through 4 for privacy reasons.
Remember to submit a new W-4 when changes to your personal or financial situation would change the entries on the form.
Have questions? Need assistance? Call Debra at 843-461-4062 or email firstname.lastname@example.org