How is the W-4 different since January 1, 2020?

NOTE: The TiM Team are not tax professionals. If you seek further information regarding the W-4, please speak to a tax or payroll professional.

According to the IRS, there are three main differences between the W-4 prior to 2020, and the version released on January 1st, 2020:

1. Elimination of withholding allowances

You will no longer see a place to enter a whole number (0-9) to claim withholding. Instead, the 2021 W-4 prompts the employee to enter exact dollar amounts. 

Prior to January 1, 2020, the value of a withholding allowance was tied to the amount of the personal exemption. Due to changes in law, currently you cannot claim personal exemptions or dependency exemptions.

The W-4’s first page contains with new sections that ask for specific withholding-related information, including income from multiple jobs of the filer and spouse, non-wage income (such as dividends, interest, self-employment payments, and retirement plans), itemized deductions, and tax credits for dependents.

2. New worksheets

Released on January 1, 2020: There are two new worksheets that replace the previous Personal Allowances Worksheet and the Deductions, Adjustments, and Additional Income Worksheet. Worksheet 1 is for the multiple job calculations. Worksheet 2 is for additional calculations for deductions, if applicable.

A further revision was made on January 1, 2021: The standard deductions in the Deductions Worksheet (page 3 of the W-4) were updated. Also, the amounts in the tables on page 4 were updated. 

3. Updates to employee filing status

Prior to January 1, 2020, the Form W-4 asked the filer if they were single, married, or married but withholding at a higher single rate. The latest W-4 poses three different options: single or married filing separately, married filing jointly, and head of household.

For more information regarding the W-4, please visit IRS.gov.

Also see: How to complete a W-4 in TiM