IRS Releases New Simplified W-4 Form
It may take people a little bit longer to adjust how much tax is to be withheld from their paycheck thanks to the newly released Internal Revenue Service W-4 Form.
Working married couples may not have as many issues in filling out the paperwork.
The new form eliminates allowances that could be made if you claimed yourself or and other family members. Now, the longer form is asking for more detailed information that may have you looking back at your previous year’s taxes. The form’s changes are a better reflection of the President Trump-backed tax law that became effective in 2018.
It’s crucial to get your withholdings right, as too little withheld means you owe the IRS.
In most cases, any worker who hasn’t had a significant tax status change from last year will not need a new W-4. It’s new employees or people who got married or who had a child that will need to fill out a new one. People who were unhappy about last year’s tax situation – smaller refund or owed money – should also fill out the new W-4.
According to Vice President of Government Affairs at ADP Pete Isberg, the form is actually more straightforward than the previous form used. However, it’s going to take additional time to fill out. He said it’s not 30 seconds and it’s done. Isberg suspects people will need to look over their last year’s tax return to help them fill out the form.
For married couples who both work out of the home, the form will be easier. They just need to check a box that indicates they both work and the right amount of money will be withheld for them.
The tricky part is found in steps three and four about dependents, extra withholdings, deductions and additional income. It’s suggested that only the person with the highest income fills out these steps.
If both parties fill out the extra income, too much is withheld from the checks. If both fill out for dependents and deductions, not enough is taken out, and you could face a large tax bill.
Isberg said having last year’s deductions, additional income and tax credits information will go a long way in filling out the new form correctly. He encourages employers to let the new employees take the form home instead of getting it done that first day.
Isberg said people need to take their time and read the instructions carefully and thoroughly to avoid a tax bill surprise.
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