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IRS Releases Second Draft of 2020 Form W-4, Tax Withholding Estimator

BY: APA Staff | 08/09/19

The IRS has released a second draft of the 2020 Form W-4, dated August 8, 2019. The IRS said one of the primary reasons that it is releasing the draft is so that it can be used to program payroll systems now. The title of Form W-4 has been changed to Employee’s Withholding Certificate, which removes “allowance” from the name. This change underscores that the Form W-4 no longer uses allowances to calculate withholding.

In this second early release draft, the IRS did not change how to calculate withholding from the first early release draft in May, although it did make several changes.

The Next Publication 15-T

The IRS scheduled the next early release of Publication 15-T, Federal Income Tax Withholding Methods, for mid-August. The next Publication 15-T “will expand on the first draft including separate computations for figuring withholding for employees who file a 2020 Form W-4 in 2020 and for a 2019 or earlier Form W-4.”

While the IRS will not post the final Form W-4 “for a few months,” the IRS said “there will be no further substantive changes.”

Tax Withholding Estimator

Earlier this week, the IRS launched its new Tax Withholding Estimator, an expanded, mobile-friendly online tool designed to make it easier for employees to have the right amount of tax withheld during the year. The Tax Withholding Estimator replaces the Withholding Calculator.

In the draft 2020 Form W-4’s General Instructions, the IRS suggests that certain employees consider using the estimator, including those who:

  • Expect to work only part of the year
  • Have dividend or capital gain income or are subject to additional taxes, such as the net investment income tax
  • Have self-employment income
  • Prefer the most accurate withholding for multiple job situations
  • Prefer to limit information provided in Steps 2 through 4 but do not want to sacrifice accuracy

APA’s Comments

APA’s Government Relations Task Force IRS Issues Subcommittee submitted comments on the draft 2020 Form W-4 and Publication 15-T. The IRS incorporated many of APA’s suggestions into the second draft. If you would like to join the subcommittee, indicate your interest by completing the Contact Us form on the APA website.

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!