Under federal law, taxpayers must pay their taxes gradually throughout the year. To allow this, there is Form W-4, Employee’s Withholding Certificate. The Internal Revenue Service requires all employees to complete this tax withholding form.
In previously issued Forms W-4, employees could claim allowances to set how much tax should be withheld from their paychecks. This has been eliminated and instead of claiming allowances based on a few factors, taxpayers now only need to detail those factors on the form.
This includes anticipated tax deductions and credits, multiple jobs, spouse works if filing jointly and extra withholdings. Based on the information you provided on Form W-4, your employer will withhold the right amount of tax. If the total taxes withheld at the end of the year exceeds your tax bill, you will receive a tax refund. Therefore, if you want to avoid owing the IRS, make sure to fill out your tax withholding form accurately.
Employee Not Filling Out Form W-4
Although it’s made mandatory by the IRS, not filing W-4 will result in the employer withholding tax at a higher single rate regardless of the employee’s filing status. If you as an employee aren’t single and have dependents, this will result in withholding way more tax than necessary. Therefore, increasing your tax refund.
Nevertheless, Form W-4 should be completed. Sure, every amount will contribute to your tax refund but as a result of that, it will tighten your tax cash flow significantly. In all cases, it is always best to complete the tax withholding form.
You can use the IRS tax withholding estimator to see how much tax you withheld to speculate how much your tax refund might be.
There are a series of forms that are used by employees regarding tax. While some of these forms are used by individuals, some are for business owners themselves. The most common IRS form is undoubtedly the Employee’s Withholding Certificate, the W-4 which allows employees to let their employers know how much tax should be withheld from their paychecks.
As our blog focuses on Form W-4, you can learn more about it from our homepage. The rest of the IRS documents that employees may have to get their hands on eventually are also can be found below.
IRS Tax Forms for Employees
Other than W-4, there are a few tax forms that employees can use. The most common one being Form I-9 which isn’t technically an IRS form but it must be completed by every newly hired individual. Since this is not an IRS form, we’ll cut it short.
The I-9 verifies the employee’s identity and their authorization to work in the United States. The form was first introduced in 1986 after the Immigration Reform and Control Act. Newly hired individuals must complete Form I-9 within three days of their hire.
Form W-2 and W-9
Form W-2 is a piece of document that employers complete, then hand it over to employees. The document then used by employees to file their tax returns. When you fill out a Form 1040, you must also attach W-2 on it. What the form does is it reports the wage, salary or any other compensation for that matter paid to employees and taxes withheld. This information going to be enough for an employee to file their tax returns.
Form W-9, on the other hand, isn’t directly related to employees. However, if you work as a freelancer, you’ll have to complete it often. The form will include your correct ITIN so that the companies hire you can file their 1099-MISC properly. As it is crucial for companies to have your W-9, we recommend filling out multiple copies of Form W-9 and giving it to the entities that will request one from you eventually.
Form W-4 is one of the few IRS tax forms that gets an update every year. The updates are mostly in the form of structural changes rather than how the tax withholding form is completed. But the latest change to the Forms W-4 for 2020 has brought some significant changes.
In previous years, taxpayers would use allowances to determine how much tax needs to withhold. Now, the allowances have been removed and instead of claiming them, you now have to detail the information you would use to determine how many allowances you needed to claim.
Changes in 2020
The overall changes increase the simplicity of the Form W-4 and kind of eliminates the pathway to withhold as little tax as possible. Technically, you could claim as many allowances as you want without any restrictions. The more you claimed the less tax would be taken from your paycheck. Also, the filing status option where you could select to withhold more tax is removed as well.
Instead of selecting your filing status as “Married but withhold at a higher Single rate”, now you’ll enter the extra withholding in the 2020’s form. The change is significantly better and improves the accuracy of the Form W-4. One thing to mention about this part of Form W-4 is that you must enter the extra withholding amount for each pay period. Entering a monthly or annual amount will result in more withholding for that pay period than necessary.
Another notable change on Form W-4 is that if you work at multiple jobs and both jobs pay similar, check the box on Step 2. But only check the box if the pay is similar. If there is a big income gap between the two jobs, doing it will result in more tax than necessary will be withheld from your paycheck. In conclusion, the overall changes made to Forms W-4 is going to make the form more efficient and accurate for many.
The Internal Revenue Service issues a new Form W-4 every year for employees to withhold tax. Since the IRS requires everyone to pay their taxes gradually throughout the year rather than paying them when you file a tax return, your employer will withhold tax even if you don’t fill out a W-4.
The Forms W-4 simply determines the right amount of tax that you need to withhold. In previously issued Forms W-4, you would claim allowances. The 2020’s Form W-4 removed the allowances from the employee’s withholding form. Instead of claiming allowances based on the information you’ve provided on the Form W-4, you simply enter the information used to determine how many allowances you should claim.
With that being said, there is no way for taxpayers to claim fewer allowances to boost their tax withholding or claim more to reduce the amount of taxes withheld. You simply will enter the amounts regarding your dependents, anticipated tax deductions and credits, extra withholding amount, and income outside of jobs if you want to withhold tax for it. Overall, the changes occurred in 2020 makes the Form W-4 much simpler and accurate for taxpayers.
As of mid-2020, it is too early to speculate any changes to the Form W-4. Since the IRS issues the new tax forms by end of the year, we should have them sometime in November or December. However, the agency is likely to release a draft version of Form W-4 for 2021 in May or June as with any other year.
Although we do not expect the allowances to be back at the Form W-4, nobody can know it for sure. But the overall changes that happened in 2020 should remain the same in 2021. The changes to Form W-4 may occur in later years as it has been how the IRS makes changes to the tax forms.
*The IRS hasn’t issued the employee’s tax withholding form for 2021 yet. As soon as the IRS releases the new form, our post will be updated with a link to view, download, and print the updated form.
Form W-4 is used to set your tax withholdings. In the previously issued W-4s, you could claim allowances to reduce your tax withholding but with the 2020’s new W-4, allowances have been removed from the form.
Instead of allowances, you will now enter information on your tax return. This eliminates one thing from tax withholding, you can no longer withhold less tax. As a general rule, the more allowances you claimed, the less tax would be withheld but with the removal of allowances, there is no way to withhold less tax. However, you can withhold more by entering a set amount that will be effective on each paycheck.
On the newly issued Form W-4, you must detail if you hold more than one job at a time, dependents if you have any, estimated itemized deduction amount you’ll claim, and income outside of jobs that you want it to be subjected to withholding.
Printable New Form W-4
As usual, you can obtain the printable version of the Form W-4 from the IRS for free. If you want to file it online then print off though, you must look for alternatives. The Internal Revenue Service does not provide the W-4 with an online fillable version.
Instead, you can get the form from this post and start filing it online or simply print it off and complete it with hand. Now that the allowances are no longer a thing on Form W-4, adjusting your allowances may be quite confusing at first. For instructions, click the link below to understand the all changes in 2020’s W-4 to get a better grasp of your tax withholdings.
The new Form W-4 is released by the IRS. If you’re starting a new job or simply want to adjust your tax withholdings, the new W-4 for 2020 is the one you’ll be using.
In the previous W-4s, you could claim allowances and this was a simple process. Simply claim as many allowances as you like and depending on the number of allowances you claimed, your tax withholding would change. As a general rule, the more allowances you claim, the lesser the amount of tax would be withheld from your pay.
The 2020’s W-4 changes this and the allowances are no longer a part of the Employee’s Withholding Certificate. Now you’ll have to give some details about your tax situation. This information includes the credit amount regarding Child and Dependent Tax Credit, deduction amount, extra withholding, multiple jobs, and spouse works.
Child and Dependent Care Tax Credit
If you have a qualifying child under the age of 17, you can claim Child Tax Credit which is $2,000 and $1,400 of this amount is refundable. The W-4 will ask you to multiply the number of qualifying children under the age of 17 with $2,000 to determine how much tax should be withheld. This is of course not the only determination point for how much tax should be withheld.
Also, you’ll need to multiply the number of other dependents wit $500 to see how much you’ll claim in Dependent Care Tax Credit. Both of these points are great ways to show the IRS that you’ll be claiming these credits and your tax withholding will be adjusted accordingly.
Form W-4 Employee’s Withholding Allowance Certificate is updated for 2020 and beyond till further notice from the IRS. The form itself hasn’t changed much but if you’ve completed a W-4 in the past, you may find the new form a little bit confusing. The only thing that has changed is the structure of the form but its purpose remains the same.
On Step 1 of the form, you’ll need to detail your Full Name, Address and filing status. In the previous form, you could select your filing status as married but would withhold at a higher rate has been removed. Instead, you only check your filing status and that’s it.
Step 2 is about your secondary or third jobs if there is any and your spouse’s work. This is only for those who hold more than one job or married filing jointly and if your spouse also works. The correct amount of taxes that will be withheld in the future depends upon income earned from these jobs.
There are also sections related to Child Tax Credit and dependents on Step 3 of W-4. On this part of the form, you need to multiply the number of qualifying children under 17 with $2,000 which is the Child Tax Credit amount for 2019 taxes. For dependents, you’ll need to multiply the number of dependents by $500.
This only applies to you if you can claim these credits and deductions.
If you don’t want your other income not to be subjected to withholdings, you can do so by entering the amount of other income. The other income refers to income that isn’t coming from jobs. It can be money you’re receiving from a property, interest, retirement income, etc.
Sign the Form and enter the date of the day you completed the W-4. If you’re an employer, enter your Employer Identification Number and First Date of Employment.
Form W-4 Employee’s Withholding Allowance and Certificate have been revisioned by the IRS. For the rest of 2020, the new W-4 must be used. Those who want to keep their current withholdings can do so without the need for issuing a new W-4. The old form is now replaced with a much simpler W-4 that guides you step by step. Here is what the new Form W-4 for 2020 contains.
Step 1: Personal Information
Step 2: Spouse Works or Multiple Jobs
Step 3: Claiming Dependents
Step 4: Other Adjustments
Step 5: Signature and Employer Information
Every step of the way speaks for itself. One thing to keep in mind is that when you’re completing Step 2, make sure that you check the box on Step 2 if there are two jobs total. Also, under Step 4’s (a) part, the other income refers to income, not from jobs. This can include interests, retirement income, or dividends. So make sure that you separate this kind of income from your job if you have any.
Other than these changes, Form W-4 has been made simpler to complete. The IRS website’s FAQ (Frequently Asked Questions) section refers to changes in W-4 as “The new design reduces the form’s complexity and increases the transparency and accuracy of the withholding system. While it uses the same underlying information as the old design, it replaces complicated worksheets with more straightforward questions that make accurate withholding easier for employees.”
Need more instructions on filing the Form W-4? Make sure you to visit the updated instructions on Form W-4.
Form W-2 Wage and Tax Statement Form is one of the IRS forms that must be completed as part of the employment relationship. Employees use W-2 to prepare their tax returns as it shows all types of incomes received from the workplace and tax withholdings. You as an employee should receive the W-2 completed by your employer sometime in January.
If you don’t receive your W-2 by the end of January, you need to contact your employer as the due date for filing W-2 for employers is January 31st every year. In case your employer doesn’t provide it to you when you file your taxes, the IRS will be on your side and late filing penalties or fees are not going to be reflected on you.
How to get Form W-2?
Employers who are going to complete W-2 for the first time should take a look at the form’s instructions. You can visit the IRS instructions for it but it doesn’t detail every box that needs to be completed. Instead, read this article to see full instructions for completing Form W-2 in 2020.
Obtaining Form W-2, on the other hand, you can purchase a copy of it from most office supply stores but why pay extra when you can file electronically? Social Security Administration offers a wide range of online tools that you can handle your paperwork online. For this, you can also read the above instructions to find how to use Business Services Online from SSA.
Those who want to file the form by hand need to first buy a complete Form W-2 from an office supply store or print it off yourself by getting the PDF file from the IRS website. You can do this by downloading Form W-2 or printing it off directly off of your browser without the need for any third-party software from the link down below.
How you file your W-4 Form, Employee’s Withholding Allowance Certificate highly depends on your how much tax you want it to be withheld from your every paycheck. If you claim zero allowances while you’re single, more taxes will be withheld from your paycheck if you were to claim one allowance.
Although there are no limits to how many allowances you can claim, your filing status plays the majority of the role. If you’re married with two kids, your allowances should be more because you would need more cash flow into your pocket. Each employee is required to file their W-4 on the first day of their job.
When the time comes for filing, you will enter basic information like name, address, SSN, and your filing status. Along with single and married options, you will see another option detailing “Married, but withhold at a higher Single rate”. You should check this box if you’re worried about not withholding enough taxes. It is recommended for married couples who both work.
The fourth box will detail name changes if you’ve recently changed your name or got married. This only goes for if you did not update your Social Security card after the name change. Lastly, you will enter your total allowances. If you can’t decide how many allowances to claim, read below.
How many allowances should you claim?
In most cases, you can determine how many allowances you can claim by looking at the list below.
If you’re single and have only one job, married filing jointly but have one job and your spouse doesn’t work, you can throw another allowance there.
Four allowances for each child you can claim Child Tax Credit for.
If you have dependents, add one allowance for each dependent you have.
One allowance for yourself.
One allowance if you’re filing jointly.
One allowance if you’re filing as head of household.
You should consider your situation and claim allowances the way that you need to. Always remember if you underpay, you are highly likely to be subjected to underpayment penalties which you want to avoid. So make sure you’re withholding enough tax and getting a good amount of tax refund.