In December 2019, the IRS released its new Form W-4, Employee’s Withholding Certificate for 2020. Prompted by the 2017 Tax Cuts and Jobs Act, the IRS made major revisions designed to make income tax withholding easier for employees, including changing the name from Employees’ Withholding Allowance Certificate.
The new form no longer has withholding allowances, which were tied to personal exemptions. Instead, employees can adjust the specific amounts of taxes withheld and can increase or decrease the amount of income subject to tax withholding.
California, meanwhile, hasn’t updated its Form DE-4, Employee’s Withholding Allowance Certificate or changed its withholding methods, which raises the question for employers — what do we do about income tax withholdings now?