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.
Learn the qualifications for Child Tax Credit