Effectively-tackle-the-tax-surprise-of-Payroll-Deduction-Update-in-2020

Effectively Tackle the Tax Surprise of Payroll Deduction Update in 2020

2020 has brought many changes to the payroll deduction method. The IRS has made changes in the withholding amounts of the employee`s paycheque. However, the IRS form W-4 has major changes in 2020. But half of the form is the same as the old one but the personal allowances are no more there in Form W-4. Moreover, one has to mention the detailed earning of the individual apart from the job. That is details about other earning sources and details earnings. On the basis of earnings, the employer will withhold the taxes from the paycheque of employees.

 

Filing Form-4

 Every year some changes are made in the form w-4 therefore, this affects the process of filling the form too. 

These are steps of filing form W-4, 2020:

  • Step 1 asks for personal information that is the name, address and the withholding status that is if one is single or married or is filing form jointly,
  •  while step 5 is about the employee’s signature.
  • Step 2 asks employees to give details about money one has from other jobs and if the wife is working then details about spouse’s salary; A new add on from the previous forms.
  • Step 3 helps the employer to determine specific tax credits the dependents are eligible for the employee.

Step 4, which is optional that is one that needs to fill it under certain criteria only.

 

Changes In The Year 2020 In The Form W-4

However, to claim the child tax credits the income of the employee needs to be within 200 thousand to 400 thousand annually. The internal revenue system needs to know every detail about the revenue one earns from different sources. And also, the spouse`s earnings. No need to show other forms of income from other businesses. Moreover, all those who had no tax liability in the year 2019 it’s then the employee can have zero money withheld from his\her paycheque. However, this is only liable if the employee claims exempt. The form also asks the estimated income of the employee in the coming year. Now the employees need not worry about any privacy concerns he/she had earlier with the other forms of income. 

 

The New Form Is Different In 2 Ways

  • The allowances are no more calculated from the year 2020. Therefore, the name of Form-4 from 2020 is “ employee`s withholding certificate”. 
  • In the year in the form W-4 the 3rd sheet that is personal allowance does not exist that is to say that there is no need to calculate the number of allowances.
  • IRS gives permission to calculate the estimated income and withholding.
  • Moreover, there are worksheets in the Form W-4. If one finds it difficult to understand the worksheet then go to the IRS website. One can understand the deductions procedure in a simpler way.

 

Conclusion

Half the form W-4 has changed in the year 2020. One can check the withholding amount online on the IRS website given in the form. The 2020 Form W-4 will enable employees to determine a more accurate calculation of their federal withholding and estimated income.

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