Bookkeeping Red Flags and What To Do About Them
Bookkeeping is strategically important for every business because financials form the foundation for daily operations and future planning....
January 2, 2020 — Every year-end, the IRS releases the newest Form W-4 to use for the upcoming tax year. Since 1987 the form has carried forward year over year with the same layout and fields for completion, but with adjustments for tax table changes and date references. For the 2020 tax year, the IRS updated Form W-4 to better align with the Tax Cuts and Jobs Act passed in 2017. Therefore, the 2020 Form W-4 reversion, effective January 1, 2020, has significant changes compared to prior year revisions and will look significantly different to taxpayer employees and employers as a result.
Most of us were accustomed to the election categories of Single or Married and listing the number of our personal allowances. For example, Single with zero personal allowances, or Married with four allowances.
However, the newly designed Form W-4 now aligns with how tax reform significantly changed the filing of individual tax returns—personal exemptions were suspended and the standard deduction was increased – and the 2020 Form W-4 removes the method of using allowances to calculate federal income tax withholding.
The new Form W-4 has five steps, but only steps 1 and 5 are required to be completed by the employee.
Steps 2-4 are optional and help the taxpaying employee to consider other sources of income and deductions that will have an impact on their federal tax liability.
The 2020 Form W-4 can be viewed here.
Which employees are required to complete the form?
As an employer, can we require all employees to complete the 2020 Form W-4?
Where is the exempt field on the 2020 Form W-4?
How can we prepare for this form change?
How can we, as the employer, assist our employees with the form change and questions that arise?
How do I claim an exemption from federal income tax withholding?
Employees:
Employers:
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