2020 Tax Withholding Changes
Federal Tax Withholding News
As you may be aware from our newsletters, the IRS has undertaken a major redesign of the federal W-4 form to align it with the Tax Cuts and Jobs Act (TCJA) which passed in December of 2017 and which came into effect with tax year 2018. The IRS has released the final 2020 W-4 and we will be adding it to our web page soon (it cannot be used prior to January 1, 2020).
In order to make this transition as smooth as possible for employees, we are including an FAQ here for common employee questions.
A few key points that we would like to communicate about the change are as follows:
- The new 2020 W-4 form is not required to be completed by existing employees, however new employees starting work January 1st or later will be required to use the form and any current employees wishing to change their federal withholding after January 1st, 2020 must use the new form.
- While current employees are not required to complete the form, it may be advantageous for employees to do so as the form is designed to lead to more accurate withholding under the new law. We have heard a lot of feedback this year regarding employees unexpectedly receiving smaller refunds or owing taxes for 2018, the new form is supposed to help set that right.
- Rhode Island withholding has not changed and still uses the tax bracket and personal allowance system, therefore the new federal W-4 will no longer be compatible with Rhode Island withholding. We will be asking employees to submit a Rhode Island W-4 (available on our website) to change Rhode Island withholding.