A Breakdown of the Draft 2020 Form W-4

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The IRS has released an updated "final" draft W-4 for tax year 2020. We talk more about what that means for payroll professionals and employers here. So what's new on the draft 2020 Form W-4? Let's break it down step by step.

Step 1: Enter personal information

This section of the form resembles the prior form in that the employee completes name, SSN and filing status.

Draft 2020 Form W-4 Step 1

Step 2: Select whether “Multiple Jobs or Spouse Works” or

  • Use the estimator or
  • Complete 4(c) “Extra withholding”

The new Publication 15-T provides two sets of tax tables that is dependent upon whether or not the checkbox in 2(c) is marked.

Draft 2020 Form W-4 Step 2

Step 3: Claim Dependents (covers the child/dependent tax credits)

This step allows the employee to identify any child tax and/or dependent credits that would apply to their 1040 return.

Draft 2020 Form W-4 Step 3

Step 4: Optional

  • Step 4(a): Identify “Other income”
  • Step 4(b): Claim “Deductions” from income
  • Step 4(c): Identify “Extra withholding” (the old “Additional amount” on line 6)

This step likely requires the employee to use the Tax Withholding Estimator made available in August of 2019.

One big change is that there is no field allowing an employee to file “Exempt”. Employees should now hand write “Exempt” under box 4(c) to claim exempt status.

Form W-4 Step 4 Optional

Step 5: Sign the form

Whew, at least that step is easy!

Step 5 Sign the Form

These changes reflected on the draft 2020 Form W-4 will likely create a large work effort for many payroll professionals and employers. In addition, employees will need to pay even closer attention to their withholdings, so using the tools provided by the IRS (like the Tax Withholding Estimator) will be extremely important to avoid unexpected surprises at tax time. Stay tuned to our blog and social media, like LinkedIn, for the latest updates on this and other important payroll news.

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