The IRS made wholesale changes to the W-4 in 2020. The form was changed to allow more accurate withholdings due to the changes in the tax code related to the Tax Cut And Jobs Act passed in 2017. This legislation eliminated personal exemptions, increased the standard deduction, and made the child credit available to more people.
Because employers and employees were not required to fill out new W-4s and the perceived complexity of the new process, many employees have still not completed a new W-4. This has caused significant confusion among employees and inaccurate withholdings. When employees are faced with a smaller-than-expected or no refund, they typically blame the employer.
To avoid this issue, it is recommended that employers ask their employees to review their filing status and complete a new W-4 to ensure the correct withholdings.
The IRS released the 2024 Form W-4, Employee’s Withholding Certificate, in February with few changes. Instructions for using the IRS’s tax withholding estimator when figuring withholding for multiple jobs, which were removed in the 2023 version, have been added back to the form. The amounts in the tax tables for use with the Multiple Jobs Worksheet have been updated for 2024.
The W-4 is completed whenever an employee starts a new job or modifies their withholding status and is an important compliance piece for payroll administrators.
2024 W-4 For Employees
The W-4 is intended to be easy for employees to fill out and to accurately tell their employers how much federal income tax they want to be withheld from their pay. Employees can withhold federal income taxes for 2024 based only on marital status. If they choose this option, the employee completes only Step 1 with their name, address, Social Security number, and filing status, and Step 5, where they sign and date the form. The result should be less confusion and less time spent navigating the entire form.
Steps 2, 3, and 4 can require more work for taxpayers with more than one job, have dependents, and/or a working spouse.
2024 W-4 Tax Withholding Estimator
Employees who are married, have dependents, hold more than one job, or have a spouse who also works will need to complete Steps 2, 3, and 4. They may also use the Tax Withholding Calculator to get the most accurate withholding.
The Estimator is quite detailed and will require information from current paystubs, any bonuses expected for the current year, retirement or other income, contributions to 401K, child care, health insurance, and more.Steps 3 and 4 are straightforward. Step 3 is used to claim deductions for dependents. Step 4 allows for additional income with no withholding, deductions outside of standard deductions, and additional withholding the employee may want to add to the calculated withholding amount.
