The W-4 form can be exciting when beginning a new job or produce anxiety when your life circumstances change. Its usage is relatively simple—for your employer to know the correct amount of federal income tax to withhold from your pay.
The seven sections of a W-4 form include your information, your SSN, your marital status, name changes, total allowance, additional allowances, and if you are exempt from withholding. The allowances section is what makes this simple form a little more complicated. This section includes considerations like dependents, head of household, and if you are taking other credits.
But, just when you have the form figured out, the IRS is about to release a new draft of it for 2020. To help you out, we’ve detailed the whats and whys.
What can I expect in the 2020 W-4?
The IRS announcement mentioned, “the new design reduces the form’s complexity and increases the transparency and accuracy of the withholding system.” Good news for all those who had anxiety over the allowances section of the previous form: allowances are no longer used in the redesign.
Instead of the previous seven steps, the form now only has five. These include personal information, applicable multiple jobs or spouse work section, relevant dependents section, optional other adjustments, and your signature.
You can access the draft here.
How will this impact my taxes?
If you have already submitted a W-4 form, you are not required to do so again. Unless, of course, your circumstances have changed. For those who want to adjust their withholding, the new form “makes it easier for you to have your withholding match your tax liability.”
If, for example, you have a more complicated tax situation, the IRS still recommends using its Tax Withholding Estimator. The estimator is especially helpful if you only expect to work part of the year, have self-employment income, or have dividend or capital gain income.
Lastly, remember this is only a draft so far. The IRS will announce any official changes in the coming months.
We’re here for you
New tax forms can be confusing and add unnecessary stress to your life. C&D’s accountants can help you navigate new tax forms like the W-4 and answer all of your most pressing tax questions.