Monday, November 30, 2020
Every good boss wants to help take care of their employees, and in many cases, this starts as early as your employees filling out their W-4 form upon being hired. As of 2020, there is a new official W-4 form for your employees to fill out. Here at Accually, we want to help payroll companies navigate the changes, so you know what’s going on with your employees and their withholdings. Learning how payroll for employers works is important. We’ve served our Boca Raton community for years, and we are confident our services can help you too!
Payroll for Employers: Basic Changes As of 2020
Three basic changes have come about as a result of the 2020 W-4, and understanding these changes is the first step to understanding payroll. The first of these is that there are no longer holding allowances. This used to be in place for tax credits, additional income, and deductions that corresponded to a personal exemption. However, since there is no longer a personal exemption option, there is no longer holding allowances. Instead, they will fill out their additional income they expect to earn and any credits or deductions they plan to claim. The second change is that there is a more straightforward design. Rather than filling out worksheets, the form asks employees simple questions; the form is also divided into five marked and defined steps. The third change is that, while there are five steps in the form, only the first and last steps are required for the employee to fill out. If this is the route they choose, their withholdings will come from tax rates and standard deduction amounts.
When Do Employees Fill Out Their W-4?
Any newly hired employee should fill out the new W-4 form before receiving their first paycheck so as to ensure you are withholding the right amount of money for their federal income taxes.
Do Existing Employees Have To Switch to the Updated W-4?
Payroll companies should be aware that employees don’t have to switch to the new form right away; they only need to fill out the new W-4 if they plan to update their withholdings information. Employees can update their information whenever they want but usually do so after significant changes in one’s life, like a marriage, divorce, or the birth of a child. They may also update their information if they got a large refund from the IRS or they ended up owing money to the IRS due to insufficient withholdings at work. The updated form must be put into effect by the beginning of the first pay period that ends on the 30th or after the thirtieth day since you received the updated document.
Understanding how payroll for employers works is crucial for payroll companies to do their jobs well. If you have any further questions, feel free to contact our Boca Raton office via our website or by phone at (1) 800-658-1324. We’d love to hear from you and look forward to helping you learn more about payroll!
Questions? Get in touch with us!