Employee Must Knows for 2020

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No Change In Your Paycheck This Month?

Then you probably need to check. 

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If you have seen no changes in takehome pay from your first paycheck of the year and haven’t changed positions, you could be either incredibly lucky or your employer has not started using the new tax tables.

If your employer has not adapted to the new tax tables, you could face a tax problem later, says Roger Harris, president and COO of PADGETT BUSINESS SERVICES®. Harris also says a dramatic change in your take home pay is another red flag that should send you directly to your tax preparer. Your tax preparer, he says, can advise you how the change might impact your tax responsibilities later and whether or not changes need to be made to your W-4 form.

The changes to an employee’s W-4 form get more complicated this year, says Harris, as the IRS issued a dramatically different form. “Gone are the days of simply adding or subtracting allowances. You will be faced with a totally different form asking questions that you probably had not previously considered when making changes to withholding.” He advises individuals to review their last income tax filing prior to completing the form or get assistance from their tax preparer. The middle portion, which might be easily overlooked, is the most important part, he says. The new W-4 form only applies to persons obtaining new jobs as of January 1 or wanting to change their withholding.

Harris also advises a checkup with your tax preparer after April 15. “That way, you have a good understanding of your tax and income of the preceding year and a good prediction of the year to come. “You don’t want to get caught in April 2021 wishing you had taken care of your withholding in 2020,” emphasizes Harris, “Your taxes are ultimately your responsibility—not your employer, so you want to make sure you have no surprises.”

Harris says that 2020 withholding is not necessarily based on an employee’s salary. The new form takes into account many other factors that influence a person’s tax responsibilitly such as an additional job or a spouse who also has an income. “Although the form might appear foreboding because it is different, the new form is really a good tool in helping a person estimate taxes,” says Harris.

Because PADGETT BUSINESS SERVICES® is a stakeholder advisor to the Internal Revenue Service, Harris said it has had the advantage of being involved in the many phases of the development of the new

form. As a result, the company was able to keep its 200 affiliates around the country updated on changes in order to effectively help their clients when the new forms and tax tables went into effect.

Hints & Highlights

EMPLOYEES’ MUST KNOW’S FOR  2020

  • New tax tables and a totally different W-4 form were effective January 1.
  • The W-4 form only applies to those starting new jobs or needing to change their withholding. If these circumstances apply to you, be prepared before completing the new W-4.
  • If you are one of those needing to complete the new W-4, review your most recent tax filing and use it to complete the new W-4. You may want to consult your tax preparer first.
  • If you have not changed positions, pay attention to your first paycheck of the new year. If there is not a change, you are either incredibly lucky or your employer has not switched to the new tax tables. If there are dramatic changes, you need to take your paystub to your tax consultant for review and recommendations.
  • Check again after April 15 to see if your numbers need to change on your withholdings and ask your tax preparer for recommendations for completing a new W-4.
  • When completing a new W-4, don’t overlook the middle portion of the form, which should be based on your previous federal income tax form and your household’s predicted income for the coming year.
  • Your taxes are the ultimate responsibility of the individual employee—not the employer.
  • Don’t get caught in April 2021 wishing you had taken care of your withholding in 2020.

Headquartered in Athens, GA, PADGETT BUSINESS SERVICES® helps thousands of small businesses in the United States and Canada with a wide array of services including basic bookkeeping to tax planning and preparation, government compliance, payroll services, general business consulting and more.


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Topics: Taxes, Payments, Employee