COMPLETING FORM W-4 2020
(Please note that the Payroll Tax Knowledge Center, LLC does not provide individual income tax advice but only providing guidance on how the new Form W-4 should be completed and steps to help guide the payroll professional as they assist the employee. Individual tax payers should consult their tax advisor for specific elections. This guide does not replace Form W-4’s instructions. Please visit www.IRS.gov for more information).
Step 1: The employee must complete Sections (a), (b), and (c) in its entirety.
If an employee wishes to claim exempt from federal withholding and is submitting a hard copy of the form, the employee must complete Step 1, write exempt in Section 4(c) then sign and date the form.
Step 2: Multiple Jobs or Spouse Works
This section is determined by the employee. Please ensure that when accepting a hard copy of Form W-4 from an employee, that if the below box is checked in Section 2(c), that it is also selected/accounted for on the employee’s record. Selecting this box calculates the federal tax using a different withholding rate schedule.
Step 3: Claim Dependents
If an employee is completing this section, please ensure that the calculations make sense and is divisible by the dollar amount on the Form W-4.
- For example; let’s assume an employee submitted Form W-4 and wants to claim 2 qualifying dependants under 17 and then 1 other dependent. If the employee submitted Figure (a) below, you can gather that they were probably thinking in terms of the old form W-4 for claiming allowances which no longer exists for the new form.
- However, in reviewing the calculation of what the new Form W-4 requires, you can provide assistance to the employee in how to complete the form. Figure (b) below shows the correct way Step 3 should be completed by the employee:
Figure (a): wants to claim 2 qualifying dependants under 17 and then 1 other dependent:
Figure (b): wants to claim 2 qualifying dependants under 17 and then 1 other dependent:
- 2 qualifying dependants under 17 X $2,000 = $4,000
- 1 other dependant x $500 = $500
- $4,000 + $500 = $4,500
Step 4: (Optional) Other Adjustments
Section (a): If the employee will have other sources of income not from jobs, they would enter an amount in Section 4(a):
Section (b): If the employee will have deductions other than the standard deduction in the hopes to reduce their withholding, they would complete Section 4(b) and refer to the instructions provided on Form W-4 (see Figure (c) below).
Section (c): If an employee wants to withhold an additional dollar amount per pay period, they would enter it here:
Step 5: Signature and Date
In addition to the employee’s signature and date, you as the employer must also complete the certification block by providing your company’s name and address, the employee’s hire date, and FEIN.
Note: If a part of your departments process is to also accept paper forms in addition to electronic submissions, please ensure that the employee both signs and date Form W-4. If it is not signed, per the form, it is not valid. Therefore, you must forward back to the employee to obtain a signature and date.