Reminiscent of Kermit’s lament, “it’s not easy to be green,” it has not been easy to be the Form W-4 since personal exemptions were eliminated by tax reform in 2017. Two days after unveiling its new Tax Withholding Estimator, which is discussed in our post of August 6, 2019, today the IRS released “the second early release draft” of the 2020 Form W-4. This latest version of the 2020 Form W-4 eliminates “Allowance” from its name, so that it will now be known as the “Employee’s Withholding Certificate.” This revision to the name is consistent with the fact that employees may no longer claim withholding allowances. In addition, for employees claiming exemption from withholding, the new draft of the 2020 Form W-4 eliminates the line provided for claiming exemption, which had appeared on the earlier version of the 2020 draft as Line 4d. An employee claiming exemption must write “Exempt” under Line 4(c) and complete only Step 1 (Personal Information) and Step 5 (the employee’s signature) before submitting the form to the employer.
According to the IRS, the second early release draft of the 2020 Form W-4 will not be posted for a few months, but there will be no further substantive changes. Thus, employers may now begin programming their payroll systems. Next up will be an early release of Publication 15-T, Federal Income Tax Withholding Methods, in mid-August. The publication will include separate computations for figuring withholding for employees who file a 2020 Form W-4 in 2020 and for employees with Forms W-4 from earlier years that remain valid because there were no changes requiring the submission of a new Form W-4 to the employer.