2020 Winter HR Insider Newsletter

WINTER 2020

NEW 2020 IRS TAX WITHHOLDING FORM (W-4) The IRS recently released a newly designed 2020 Form W-4 on December 31, 2019. The new W-4 form eliminates the number of withholding allowances and includes a new marital status – Head of Household.

marital status. You will be prompted to make a selec- tion. Step 2: should be completed for employees with mul- tiple jobs or two-earner families. ADP will have you select/complete one of three options on- line.

The 2020 Form W-4 is designed to be both easier and more accurate, permit- ting easy adjustments for anticipated tax credits, other income, and deduc- tions. If you would like to adjust your withholding to account for these factors, it is recomended that you download and review the new Form W-4 so that you can update your information online by logging into your ADP account and se- lecting; Myself > Pay > Tax Withholdings Form W-4 Highlights The new Form W-4 calculates withhol- ding by having you complete five steps. Not all the steps are required for ever- yone. Doing so will make your withhol- ding more accurately to match your tax liability. Step 1: includes personal information such as your name, social security number, address, and anticipa- ted filing status. ADP will automatically pre-fill this information for you with the exception of your filing/

The 2020 Form W-4 is far easier and more accurate with respect to adjusting for tax credits, other income, and deductions. Prior ver- sions required the employee to perform a 9- or 10-step worksheet to calculate an additional amount to with- hold or establish additional allowances. With the new version, employees will simply enter a full year esti- mate in dollars. The payroll system will apply those amounts automatically to per-payroll wage and tax withholding calculations.

Step 3: should be completed for em- ployees with dependents. It provides instructions for determining the amount of the child tax credit and the credit for other dependents that you may be able to claim. Step 4: is optional and is for other in- come such as dividends, retirement, etc. This section is also used to claim exemp- tion from withholding or withhold addi- tional tax each pay period. Step 5: is for your signature and date if completing a paper form (only for new hires). The IRS urges everyone to see if they need to adjust their withholding by

using the Tax Withholding Estimator to perform a Paycheck Checkup for the most accurate withholding. Employees are not required to complete a newW-4 for 2020. ADP will continue to observe the withholding allowances and filing status elected by employees who completed a pre-2020 Form W-4.

Retirement SICK LEAVE RETIREMENT SAVINGS ACCOUNT (401A) Employees with sick leave hours in excess of 480 hours at the end of the calendar year in 2019 will have their hours converted into real dollars and placed in a 401a Money Purchase Plan. These contributions will be made at the beginning of the plan year into an account in your name for the exclusive benefit of you and your beneficiaries. The value of the account is based on the contributions made and the investment performance you select over time. No taxes are due, including on earnings, until you make withdrawals. When you leave employment, you are el- igible to withdraw money from your account as you see fit, but you are not required to take payments until after age 70½. You have the flexibility to take money as needed, including the ability to have payments automatically deposited to your bank account every month. Payments are generally subject to taxes and an IRS-imposed 10% early withdrawal penalty may apply to payments taken prior to age 59½. If you have any questions, you can con- tact Margaret Ross at entension 110 or Raquel Garza at entension 137.

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