What is the form W4 and why did it change?

The employee’s withholding certificate or form W4 is one of the documents you need to complete once you get a new job. Employers will ask new collaborators to fill out this form in order to determine the amount of taxes that are withheld with every paycheck in the future.

 

After filling out this paper the employers send the information related to the money that’s going to be withheld from paychecks to employees to the IRS (International Revenue Services) with all your personal information and also the security number.

 

 

What is form W4 used for?

It is very important to fill out this form the right way because the IRS will ask you to pay taxes on your income gradually at different times throughout the year. In the case you don’t retain enough taxes, the IRS could charge you later with interest and penalties for incomplete payment of taxes.

 

On the other hand, if you withhold too much taxes you will get your overpaid taxes next year by sending a file for tax return in order to receive a refund.

 

 

Why did the 2020 form W4 change?

It has changed to simplify its own use and to offer a more transparent withholding system. However, the change is really significant and we all need to get used to it.

 

Among all changes the form includes more questions that help employees determine more accurately how much they’re going to withhold. Truth is people are not totally happy with the new form W4, but hopefully it will be easier to understand in the near future. 

 

You might be interested in:  Classify your employees: the difference between full time and part time

 

Who needs to fill out the new form W4?

Not all the employees need to fill out the form W4.

 

Employees who need to complete it:

 

1 | All new hires.

 

2 | Employees who completed a form W4 before 2020 and are looking to make changes to 

their withholding in 2020.

 

Employees who don’t need to complete it

 

1 | Existing employees hired before 2020.

 

It´s o.k for employees who don’t need to fill out the form because their employers will continue to determine their withholding, taking into account the information people have sent in previous forms.

 

How to explain to employees how to complete the new 2020 form W4?

 

If your employees need to fill out the new form W4, it is not about just handing them the form and expecting everything goes o.k. This can lead to inaccurate completion or different errors.

 

Our suggestion is to plan a date for employees to receive support as they complete the form, whether that’s being present with them or offering a pre-recorded training.

 

We hope now you understand more about the form W4. Midtown HR is focused on simple solutions for payroll and taxes, propose benefits that really feel like benefits, keep up with employment law and also help protect your team.