The IRS Is Changing Paycheck Withholdings and It’s Going To Be A Headache!
Early indicators show this isn’t going to be easy. The new W-4 form incorporates the changes introduced by the new tax law. What does this mean for you and me? The amount held back for taxes in each of our paychecks will be more accurate.
You might be asking yourself what the goal of the IRS is for this change. “A taxpayer shouldn’t owe or be owed come tax time.”
While the current W-4 form asks for amount of allowances based on exemptions, the new form asks workers to input the annual dollar amounts for:
Nonwage income, such as interest and dividends
Itemized and other deductions
Income tax credits expected for the tax year
For employees with multiple jobs, total annual taxable wages for all lower paying jobs in the household
It appears that the new W-4 will be just like completing a 1040. Ernst and Young worried employees would struggle to fill it out correctly and employers may need to offer training.
Disclosing spousal and family income might make some people uneasy having to share private information to their employer(s) as well as having another job or side work outside their full-time job.
Like it or not, the draft of the W-4 is expected to be released by May 31, 2019 and rolled out by 2020.
The final W-4 will be released by the end of the year in time for the 2020 tax year.
It is important taxpayers become familiar of what will be required. Pull out that 1099, paystubs and last year’s tax return.
Your filing status
Number of Dependents
Information about your itemized deductions such as home mortgage interest, state and local taxes, and charitable deductions
Earnings from all jobs
Information about nonwage income such as business income, dividends, and interest