The IRS recently overhauled and updated Form W-4 for Tax Withholdings. Since most people tend to complete the form once and forget it, this is the year you may want to complete the new form with your employer when it becomes available so you are good to go for 2020. Many employers have an automated system for submitting an employee’s changes for Form W-4. Please be sure to check with your employer to see if they have this option available.
The IRS also encourages everyone to use the Tax Withholding Estimator to perform a “paycheck checkup.” This will help you make sure you have the right amount of tax withheld from your paycheck. However, you will need to wait until January to use the IRS estimator for 2020. (The estimator has not been updated yet.) See: https://www.irs.gov/individuals/tax-withholding-estimator
According to the IRS, the new Form W-4 design reduces the form’s complexity and increases the transparency and accuracy of the withholding system. While it uses the same underlying information as the old design, it replaces complicated worksheets with more straightforward questions that make accurate withholding easier for employees. Allowances are no longer used for the redesigned Form W-4. This change is meant to increase transparency, simplicity, and accuracy of the form. In the past, the value of a withholding allowance was tied to the amount of the personal exemption. Due to changes in law, currently you cannot claim personal exemptions or dependency exemptions.
Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. Also, you should always revisit the W-4 if you have major life changes, such as marriage, the birth of a child, […]