Keeping Compliant with the Updated W-4 Form

Woman filling out a form

Today we want to discuss something that isn’t exactly “new” but still has relevance since there is still a good amount of turnover in the workplace with the incumbent need to fill out new forms for the IRS. Whenever someone starts a job at a new employer, the employer is required to have the employee fill out a W-4 form for the Internal Revenue Service. As of January 1, 2020, there is a redesigned form that must be used for any new employees…OR any employees that wish to make changes to their current withholding status.


The updated W-4 form was created out of the 2017 Tax Cuts and Jobs Act, which brought some significant changes to the tax code, with personal exemptions being eliminated, standard deductions increased, and tax brackets as a whole being modified.

Updating the W-4 was meant to improve the accuracy of the amount withheld from paychecks by asking clear and specific questions about the person’s income, dependents, and deductions. The goal was to reduce the chances that anyone would get either a large refund or a large bill on tax day the following year.

The new version of the W-4 was designed in a simpler and more user-friendly way, eliminating complex calculations and replacing them with more straightforward steps to account for those times someone works multiple jobs or has several sources of income. They also provided clearer guidance and instructions to make it easier to understand how withholding is calculated, so adjustments can be more easily made when changes in personal or financial situation occur.

Employers’ Responsibility

As an employer, it will be your responsibility to stay in compliance with the latest requirements for the W-4. The primary task in compliance is to stay up-to-date with the latest in guidelines and updates that the IRS issues in regard to the W-4 form. When they make changes, they generally have reasons for them and they will usually communicate those reasons.

Make sure the employees have the latest version of the W-4, and make sure your employees know how to complete it. You might offer informational sessions that provide access to IRS resources, or have someone from the HR department talk to everyone. 

If someone new is hired, they must use the updated W-4. If someone wants to make changes, they also must use the updated form. In either case, make sure the forms are processed quickly and accurately, with the payroll system updated to reflect the changed withholding amounts if necessary. You should keep the original records for four years and you should ensure those records are kept private and secure.

Offer employees the chance to review and change their withholding annually. Of course, they are allowed to change it whenever they choose to, especially when there are major life changes like a birth, death, marriage, or divorce. Giving employees an annual notice that they can make changes may give them a reasons to think about it before they need to make any changes.

Use the resources the IRS has provided, communicate changes in tax laws and requirements to your employees as soon as you can, and assign someone to monitor compliance with IRS requirements so small adjustments can be made as needed.

The new W-4 should make life easier for both employee and employer, but you must stay in compliance with the rules and regulations in order for it to all work smoothly. If you have questions about this or any other HR matter, please reach out to Southern Payroll & Bookkeeping today: 423-207-2497.

Keeping Compliant with the Updated W-4 Form