Effective January 1, 2020, all new employees were required to complete the redesigned W-4 which was intended to be easier for employees to fill out and to accurately tell their employers how much federal income tax they want withheld from their pay.
The old system was tied to the use of exemptions and deductions on your tax return. When these exemptions deductions were removed in the Tax Cuts and Jobs Act, the form W-4 no longer estimated the correct amount to be withheld as well as it used to.
So, the ITSDA implemented a change to the withholding tables that employers use along with the information on the W-4 to calculated federal income tax withholding.
The form is far from easier for employees to fill out – it is one of our most asked questions. Many people worry when they see there is little or no federal taxes being taken out of their first few paystubs. However, remember the formulas are estimating that the amount on the paystub is what you will be making through the end of the year.
For year 2021 – employees can elect to withhold federal income taxes based only on marital status. For detailed instructions, go to https://www.irs.gov/pub/irs-pdf/fd4.pdf
The advice from the IRS? If you don’t feel the results are correct for your situation, make adjustments in the “other adjustments” section, submit a new Form W-4 and check the results on your paycheck after the adjustment takes effect. …and there you have it.