The Tax Cuts and Jobs Act of 2017 changed the calculation method for individual income tax and withholding starting in the 2018 tax year. The IRS has issued a revised Form W-4 for the 2020 tax year, based on the new tax laws.

Update Form W-4

Employees are not required to submit a 2020 Form W-4 unless one of the following situations applies:

• The employee is a new hire or rehire and has a start date on or after January 1, 2020.
• The employee needs to change their federal withholding elections or state withholding elections for the seven states that follow federal regulations.
• The employee claimed EXEMPT in 2019 and their withholding exemption expires on February 15, 2020.

Employees are encouraged to update their Form W-4 to ensure their tax allowances account for any changes that may affect their personal situation. The IRS has updated the IRS Withholding Calculator, available from the IRS website (www.irs.gov/W4App), to assist employees with calculating their allowances for the current tax year.

Reference: For details on updating employee withholding, refer to Update Federal Tax Form.

Changes for 2020

The IRS issued the final 2020 Form W-4 December 5, 2019. The IRS has published a comprehensive FAQ available on their website to address common questions related to these changes: FAQs on the draft 2020 Form W-4.

Key changes to Form W-4 include:

• The removal of claimed allowances, and
• New lines to capture information about
  • other income,
  • claimed dependents,
  • deductions,
  • multiple jobs or working spouse, and
  • updated filing statuses.

Note: The 2020 Form W-4 will be effective January 1, 2020 and should only be used for withholding elections on or after January 1, 2020.

Enhancements in PlanSource

Employer Experience

The following pages have been updated to reflect the new fields and statuses for the 2020 Form W-4:

Note: Once a 2020 Form W-4 has been submitted, you are unable to revert back to the 2019 elections.

Employee Experience

The 2020 Federal Form W-4 is now available for employees to update their U.S. federal tax withholding elections in PlanSource from the Withholding – Federal page (Menu > Myself > Pay > Income Tax > Things I Can Do > Add/Change Withholding Form (W-4) > Employee’s Withholding Allowance Certificate (W-4)).

The new Federal Tax Form W-4 questionnaire guides employees through each step of the new withholding form, including the updated Filing Statuses, new fields to capture multiple jobs or working spouse, Claimed Dependents, Other Income, and Deductions. The Claimed Allowances field previously available on the 2019 Form W-4 and earlier versions has been removed.

Pay Statements (including online pay statements) will no longer include the following federal, state, and local tax details:

• Withholding statuses
• Exemptions claimed
• Additional withholding amounts

Mobile app updates

Menu > Pay > Taxes > Withholding Forms > Federal W-4

New fields visible to employees who have updated their Federal Form W 4

Fields removed:
•Allowances

Fields added:
•Claim Dependents Total
•Other Income
•Deductions

Tax Advice Disclaimer

This information is provided as general guidance, but should not be considered tax advice. If your employees have questions regarding their personal tax situations, they should contact a tax professional, or visit the IRS website (www.irs.gov).

Comparison – PlanSource vs. Form W-4

Below is a comparison between the PlanSource W-4 Form under the Administrator view and the 2020 W-4 Form.

Learning Resources: