The IRS has released an updated, newly named draft Form W-4 for 2020. Once finalized, the revised form is expected to become effective on January 1, 2020.

Evolution of the W-4
Following enactment of the Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97), a revised version of IRS Form W-4 was originally released in 2018 for the 2019 tax year. However, the form was quickly pulled based on broad concerns surrounding its complexity, a Treasury spokesperson told Wolters Kluwer. One year later, the IRS released a significantly updated version of the draft Form W-4 last May.

Once more, several additional, substantive changes have been made to the latest draft Form W-4, again after receiving extensive stakeholder feedback. The IRS’s release of the draft 2020 Form W-4, now called “Employee’s Withholding Certificate” (dropping the word “Allowance”), marks the second of three rounds of edits expected this year. Titles of the related worksheets were revised as well.

New Form “Simplifies Tax Withholding Experience”
“Our dedicated staff at the Treasury and IRS worked tirelessly over the past year to produce a Form W-4 that is more accurate, transparent and simplifies the tax withholding experience for hardworking Americans,” Treasury Secretary Steven Mnuchin said in an August 9 Treasury press release. “We are proud that the Tax Cuts and Jobs Act lowered taxes for most Americans and are enthusiastic that the improved W-4 will help taxpayers better determine the correct withholding amount for their personal financial situation to more readily reap the benefits of historic tax reform.”

The redesigned draft 2020 Form W-4 uses a “building block approach” that replaces complex worksheets with straightforward questions, which will make it easier for employees to determine a more accurate withholding, according to the Treasury press release. Notably, employees who have submitted a Form W-4 with their current employer in any year before 2020 will not be required to submit a new form based solely on the redesign.

No Further Substantive Changes Expected
Additionally, Treasury and the IRS announced that no further substantive changes to the draft 2020 Form W-4 are anticipated beyond minor updates for inflation. A final version of the form is expected to be released this November.