The IRS updated the Form W-4 to reflect tax code changes ushered in by the Tax Cuts and Jobs Act, which took effect in 2019. It’s even got a new name: Employee Withholding Certificate. The previous W-4 forms were tied to the personal exemption amount — $4050 for 2017 — which has now been suspended.
President Trump wants the American people to keep as much money from their paychecks as possible. Truthfully, there is no reason why the IRS should take extra money from us and earn interest on that money for months, only to give it back. We should be putting that money into our own interest bearing accounts or into retirement. The possibilities are endless. The W-4 has been revised to help us do just that.
This new design does increase the transparency and accuracy of your withholdings.
The goal for this way of tax withholding is having a ZERO balance on your taxes. The government shouldn’t take more money than they are owed, and you shouldn’t have to pay when April 15th comes around.
What you need to know:
All new employees hired as of Jan. 1, 2020 must complete the new form.
Current employees are not required to complete a new form but can choose to adjust their withholding based on the new form.
Any adjustments made after Jan 1, 2020 must be made using the new form.
Employers can still compute withholding bases on information from employees’ most recently submitted Form W-4 if employees choose not to adjust their withholding using the revised form.
A new Publication 15-T, Federal Income Tax Withholding Methods, has been published for use with the new 2020 W-4 form that will include steps employers can take to determine federal withholding. (https://www.irs.gov/forms-pubs/about-publication-15-t)
Some are finding this new form to be straight forward and much easier to fill out, but some of the changes can be confusing.
For instance, if you and your spouse have more than one job combined, the tax liability is taken from the highest paying job, and you use the IRS Tax Estimator or the Multiple Jobs Worksheet to calculate income from another job. If you have more than one job in your household and file to withhold from the highest paying job, you still have to fill out a W-4 for your other jobs. You claim a dollar amount for your defendants instead of an allowance per dependent.
HR departments are being advised to allow the employees to take the Form home and fill it out rather than having it filled out and returned on the first day of employment because the revised Form requires tax information that the employee may not have on hand.
EDIC will help you get your W-4 filled out correctly. Go here and fill out the form, or call or text 719-377-8443 and we’ll get back to you shortly.