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What Retirees Need to Know about the New IRS 2020 W-4


The Tax Cuts and Jobs Act of 2017 brought many changes, some of them quite recently.

One is that the Internal Revenue Service (IRS) issued a new 2020 IRS Form W-4 that is quite different from previous Form W-4s.

Another change is that the 2020 tax tables from the IRS created some withholding changes, even for those who did not request a change to their individual withholding. These changes were made because of guidance from the IRS that provided different withholding based on a retiree’s previous tax status. Because of this guidance, some people saw an increase in their tax withholding.

You can verify and update your tax withholding information easily in myPay by clicking on “Federal Withholding” under “Pay Changes” in the menu on the left.

You can also mail or fax DFAS a new 2020 IRS Form W-4 to request a change in your federal withholding.

It’s important to note that you are not required to file a new IRS Form W-4, unless you are claiming exemption from federal taxes. Retirees claiming exemption from federal taxes must submit a new W-4 every year. The word “EXEMPT” must be written above the signature date.

On the new IRS W-4 form, Step 1 and Step 5 are the critical steps that need to be filled out. Without this information, DFAS cannot process any updates to your account.

Step 1 is Personal Information, including filing status. On the new W-4, taxpayers now must choose either Single, Married, or Head of Household instead of the previous statuses where a taxpayer may have chosen, for example, Married with two deductions (M-02) or Single with no deductions (S-00).

For Step 3 and Step 4, you should follow the instructions carefully. Some retirees have sent W-4s with additional income or withholding that causes their net pay to be zero. DFAS cannot process these, so we will leave the tax withholding as is and send a letter.

Step 5 is the filer’s signature and date. We cannot process a W-4 that is not signed and dated.

You should keep in mind that DFAS is unable to provide tax advice. If you have tax or withholding questions, we recommend you consult a tax professional or the IRS website at https://www.irs.gov. You can also use the IRS estimator at: https://www.irs.gov/individuals/tax-withholding-estimator
 

Page last updated on Sept 16, 2020