The W4 form is a paper used for tax reporting purposes issued by the Internal Revenue Service (IRS). This document has a format title of ‘Employee’s Withholding Certificate’ and it informs about the amount of tax to withhold from the employees’ every single paycheck. The employers use this form to calculate and report certain taxable income to the IRS on behalf of their employees.
The form requires the employee to input their identifying information, including full name, Social Security Number (SSN), and address. This is because the withheld tax is contributed towards the employee’s yearly income tax bill that’s filed every year for tax return purposes.
Employees do not need to complete a new form of W4 every year, as long as they work under the same employer. However, if they recently go through major life changes that affect their taxes, then it may be necessary to update the document.
W4 Form New Major Adjustments
In 2020, the W4 form had gone under a massive makeover. Here is a breakdown of how the pre-2020 adjustment form appeared to be:
- It states the number of claimed allowances;
- It shows the desired amount of withheld tax from the employee’s paycheck;
- It allows the taxpayer to use separate worksheets to calculate the allowances number, which most considered as cumbersome.
It used to have seven sections but now cut into five sections only, with three sections being the main ones. A lot of the essentials stayed the same, however, including the taxpayer’s personal information details.
In general, a lot of people deemed the new form to be easier to understand, mostly because it is indeed the purpose of the upgrade. It also necessitates the taxpayers to only complete the sections that apply to their respective situations. The newly adjusted form of W4 still enables the taxpayer to claim the status of exemption, assuming the eligibility has been met.
How to Complete the New W4 Form
Here are five steps to be performed to complete the W4 form:
- Step 1 – Entering the taxpayer’s identifying personal information, including name, address, SSN, and filing status (single, married, or head of household).
- Step 2 – Stating the circumstances that indicate the taxpayers to withhold their taxes less or more than the regular amount, such as their job status (freelance or second job) or factor like spouse’s income.
- Step 3 – Stating the number of the taxpayer’s dependents, such as children.
- Step 4 – This section is optional to fill, in which the taxpayer is indicating other reasons to withhold their taxes less or more than the regular amount. For example, they may gain passive earnings from rental property or investment that increase their taxable annual income and the amount of owed taxes.
- Step 5 – Putting in the taxpayer’s signature.
The explained five steps above inform the taxpayers about the process of completing the W4 form. Now that it has undergone the adjustments, they should be able to understand the form easier, which in turn means they can complete the form and report their tax to withhold amount more accurately.
2022 W4 Form Printable, Fillable PDF