early employers are a small besides familiar with both the new IRS W-4 human body and the old interpretation. It can be unmanageable juggling both 2019 and earlier Forms W-4 with 2020 and late forms. To combat this, the IRS released a newfangled, optional computational bridge for 2021 .
You probably have questions. What is the IRS new W-4 ? How does it differ from previous versions of Form W-4 ? What is the computational bridge, and do I need to use it ? If you need to be caught up to speed on the latest W-4 news, read on for the newfangled W-4 shape, explained .
New W-4 form recap
The “ newly ” Form W-4, Employee ’ s Withholding Certificate, is an update version of the previous Form W-4, Employee ’ s Withholding Allowance Certificate. The IRS launched this form in 2020, removing withholding allowances. The new IRS W-4 complements the changes to the tax law that took consequence in 2018. This new design aims to simplify the process of filling out Form W-4 for employees and improve tax withholding accuracy.
here ’ s a quick summation of the two significantly unlike versions of the human body :
- 2020 and later Forms W-4: “New version” without withholding allowances
- 2019 and earlier Forms W-4: “Old version” with withholding allowances
New hires who receive their first paycheck after 2019 must use the 2020 and late versions of Form W-4 when they begin working at a business. On the form, employees enter their contact information and Social Security number, report their filing condition, and claim dependents .
Your other employees don ’ t need to fill out the raw human body. however, employees who want to update their withholdings and need to change W-4 forms must use the 2020 and former versions .
Use Form W-4 to determine how much to withhold from an employee ’ randomness megascopic wages for federal income tax. You need the employee ’ randomness completed Form W-4 to use the withholding tax tables in IRS Publication 15-T .
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possibly you have both the “ old ” and “ modern ” versions of the W-4 on file. If you don ’ t like using two separate sets of rules ( and income tax withholding tax tables ), you might be interest in the IRS ’ s computational bridge released in 2021 .
fix to dive in ?
New IRS W-4 form vs. old: What’s the difference?
There are a few changes with the Form W-4 2020 and subsequently versions that go beyond having a new list and layout. You and your employees should understand how to fill out a mannequin W-4 2022 .
The 2022 W-4 form, is divided into five steps :
- Enter Personal Information
- Multiple Jobs or Spouse Works
- Claim Dependents
- Other Adjustments
- Sign Here
The IRS only requires that employees dispatch Steps 1 and 5. Steps 2 – 4 are reserved for applicable employees .
Like previous versions of the form, there is a multiple jobs worksheet and deductions worksheet on the new form .
But unlike former versions, the new form did away with withholding allowances. Employees can no longer claim withholding allowances .
In the by, employees could claim withholding allowances to lower the amount of federal income tax withhold from their wages. The more withhold allowances an employee claimed, the less you would withhold in union income tax .
not anymore .
so, how does the newly W-4 withholding tax shape ? now, employees who want to lower their tax withholding tax must claim dependents ( Step 3 ) or use the deductions worksheet and enter the amount in Step 4 ( barn ) .
Employees can besides request employers withhold more in taxes in Step 4 ( a ) and 4 ( c ). If an employee requests extra withholding each wage menstruation, make certain to account for that sum .
Checking the box in Step 2 besides increases the sum of federal income tax withholding. Employees check this box if they work two jobs at the same fourth dimension or if both they and their spouse work .
What these changes mean for employers: Q&A
Have questions about the new W-4 kind 2022 ? Want to make income tax withholding consistent in your workplace ? Take a expression at our Q & A section downstairs .
1. What is the purpose of the redesign?
The determination of the update form is to better match the changes to the Tax Cuts and Jobs Act. The newfangled imprint supports the withholding mesa bracket updates .
Another rationality for the redesign class is ease-of-use. The IRS hopes that the new shape will be easier for employees ( and employers ) to understand. And, the form is supposed to boost tax withholding accuracy .
2. Are withholding allowances gone?
Yes, withholding allowances are gone. Employees filling out the 2022 Form W-4 can no farseeing claim withholding allowances .
3. Which withholding table should you use?
Like former income tax withhold tables, there are two methods for calculating union income tax withholding—percentage and engage bracket methods .
But because of the two versions of Form W-4, there are even more income tax withhold tables to choose from. IRS Publication 15-T has tables that work with withholding allowances for pre-2020 W-4 forms. There are besides tables that match with the 2020 and late Forms W-4. And, there is a table for automatize payroll systems .
therefore, which do you pick ? The table ( or tables ) you use may depend on :
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- Whether you use a manual or automated payroll system
- Which form version you have in your records
- Whether you prefer the wage bracket or percentage method
If you use an automated payroll system, you must use the follow table, regardless of which version of Form W-4 you have on file :
- Percentage method tables for automated payroll systems
If you use a manual of arms payroll organization and have 2020 and late W-4 forms on file, choose between the follow tables :
- Wage bracket method tables for manual payroll systems with Forms W-4 from 2020 or later (cannot use this method if the employee earns over $100,100)
- Percentage method tables for manual payroll systems with Forms W-4 from 2020 or later
If you use a manual payroll arrangement and have 2019 and earlier W-4 forms on file, choose between the trace tables :
- Wage bracket method tables for manual payroll systems with Forms W-4 from 2019 or earlier (cannot use this method if the employee earns over $100,100 or claims more than 10 allowances)
- Percentage method tables for manual payroll systems with Forms W-4 from 2019 or earlier
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4. What’s the difference between Standard vs. Checkbox rates?
When using the 2020 and subsequently income tax withholding tax tables, you ’ ll see two rate schedules : 1 ) “ Standard Withholding ” rate and 2 ) “ Form W-4, Step 2, Checkbox Withholding ” rate .
Use the Standard rate if employees merely fill out Steps 1 ( Enter Personal Information ) and 5 ( Sign here ) .
Use the Checkbox rate if the employee checks the box in Step 2 ( Multiple Jobs or Spouse Works ) .
5. Do all employees need to fill out a new form?
No. An employee must fill out the mannequin if they :
- Are a new hire whose first paycheck is in 2020 or later OR
- Decide to change their withholdings (applies to employees with 2019 and earlier forms)
6. What is the computational bridge?
The computational bridge is a four-step method employers can use to “ convert ” 2019 and earlier forms to 2020 and late forms for income tax withhold consistency. The IRS released the computational bridge in 2021. It is wholly optional .
Use the computational bridge to treat all Forms W-4 like the 2020 and late versions. This option lets employers who use manual payroll systems stick to one income tax withholding mesa .
If you decide to use the computational bridge, gather the 2019 and earlier W-4 form and a fresh 2020 and subsequently form. then, make the following four adjustments :
- Find the employee’s checked marital status on Line 3 (2019 and earlier Form W-4). Then, choose a filing status in Step 1(c) (2020 and later Form W-4) that reflects this marital status:
- “Single” >> “Single”
- “Married, but withhold at higher single rate” >> “Married, filing separately”
- “Married” >> “Married filing jointly”
- Enter an amount in Step 4(a) (2020 and later Form W-4) based on the filing status you selected:
- $8,600: “Single or “Married filing separately”
- $12,900: “Married filing jointly”
- Multiply the number of withholding allowances claimed on Line 5 (2019 and earlier Form W-4) by $4,300. Enter the total into Step 4(b) (2020 and later Form W-4)
- Enter any additional withholding amounts the employee requested on Line 6 (2019 and earlier Form W-4) into Step 4(c) (2020 and later Form W-4)
Help! I need an example
Let ’ s go through the computational bridge, gradation by footfall. Say the employee marked “ Single ” on the 2019 and earlier Form W-4, claimed 1 withholding tax allowance, and did not request any extra withhold amounts. Fill out the latest W-4 kind, which is the 2022 Form W-4 .
here ’ s how the computational bridge would look in action :
- The employee’s filing status on the 2022 Form W-4 would be “Single”
- Enter $8,600 into Step 4(a) on the 2022 Form W-4
- Multiply the employee’s claimed withholding allowance (1) by $4,300 to get $4,300. Enter $4,300 into Step 4(b) on the 2022 Form W-4
- Because the employee did not claim any additional withholding amounts, you do not enter anything into Step 4(c)
here ’ s an case of W-4 form filled out using the computational bridge :
immediately, you can use either the engage bracket or percentage method acting income tax withholding table for Forms W-4 from 2020 or late. To do thus, just refer to the “ converted ” 2022 Form W-4 .
Remember, this is merely for the purpose of figuring federal income tax withhold. The fresh kind you create does not replace the 2019 and earlier Form W-4 the employee completed. Keep both forms in your records .
If the employee ends up furnishing a new form, stop using the computational bridge for that employee .
7. What happens if a new hire doesn’t fill out the form?
Treat fresh hires who do not fill out the new form as single filers with no other adjustments. Use the standard withhold pace for these employees .
8. Can employers force employees to submit a new form?
Although you can ask your employees with 2019 and earlier W-4 forms to submit a new form, you can not force them to .
If you ask your employees to fill out a new form and they are not required to, you must explain two things :
- They are not required to do so
- Their withholding will continue to be based on their previously submitted Form W-4 if they do not fill out the 2020 or later versions
again, you can not force employees first paid before 2020 to fill out a new form. And if these employees refuse to do therefore, you must continue using their previous form ( but you can use the computational bridge, if desired ! ) .
9. What does the IRS form look like?
You can view the wax 2021 W-4, Employee ’ s Withholding Certificate, on the IRS ’ s web site. And if you want to see the 2019 and earlier version, you can check it out here.
This article has been updated from its master publication date of December 18, 2019 .
This is not intended as legal advice ; for more information, please click here.