Beware, Changes are Coming to Form W4
If you are employed, chances are you have filled out a W-4 form. Currently, employers are required to have all employees fill out a Form W-4 indicating their marital status and the number of withholding allowances they prefer. When an employer calculates an employee’s paycheck, the income taxes taken out of the paycheck are determined by the allowances claimed on the employee’s Form W-4. Seems simple, right? It’s about to get more complicated.
In 2020 all employees will be required to fill out a new, complex Form W-4 due to IRS changes to the payroll withholding tables following the enactment of the Tax Cuts and Jobs Act on January 1, 2018. According to the IRS, the first draft version of the 2020 Form W-4 is expected to be released by May 31st, 2019. Payroll experts have reviewed earlier drafts with skepticism, saying the new forms require twice as much information than the old forms.
According to USA Today Journalist, Janna Herron, the draft form of the new W-4 asked workers to input the annual dollar amounts for:
- Nonwage income
- Itemized 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 is likely the average American will not know how to fill this form out correctly. In addition to the level of difficulty, employees could find the requirement to share this level of personal information invasive.
When the draft is released, the IRS welcomes your comments on the redesign. After review, the final 2020 W-4 version should be available by year-end. If you are an employer, stay up to date with the latest information regarding the new Form W-4 requirements. It will be important to understand the revised Form W-4 in order to explain to employees how to properly complete the forms.
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