A New Look For The Form W-4
The Internal Revenue Service and the Treasury have been working their way through the many, many ramifications of last December’s Tax Cuts and Jobs Act. Early in the year they offered updated withholding tables so taxpayers could take advantage of some of the tax reform changes, while more recently they released a draft of a postcard-sized 1040.
And in June, they released a draft of a proposed version of Form W-4, “Employee’s Withholding Allowance Certificate,” along with new instructions for filling it out. Here are some of the highlights.
Taxpayers who are used to claiming allowances will be surprised to find that there is no place on the form to report the number of allowances claimed. In addition, the “Personal Allowances Worksheet,” the “Deductions, Adjustments and Additional Income Worksheet,” and the “Two-Earners/Multiple Jobs Worksheet” have all been eliminated.
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Instead of asking for a number of allowances, the form has added lines for the optional reporting of non-wage income that isn’t subject to withholding, expected bonuses, itemized deductions and expected credits, and the wages of other members of the taxpayer’s household.
Groups like the American Institute of CPAs and the National Association of Enrolled Agents have pointed out that not all employees will be comfortable sharing some of this information with their employers.
Shorter … or not
The proposed W-4 is only two pages – half the length of the current four-page version. Some of those four pages, however, are the instructions for the current form, while the proposed form has a separate set of instructions that comes in at a whopping 11 pages.
Between the extra information and the extra calculations suggested in the instructions and other IRS guidance, the result will be something like what industry experts have described as a “mini-1040” that will allow taxpayers to much more accurately determine the appropriate withholding.
No change at all, unless you want it
The IRS and Treasury have made it clear that taxpayers and their employers can continue to use the current W-4, and have said that their goal is to make the system “backwards-compatible,” so that taxpayers who are satisfied with their current withholding don’t have to file a new one.
Take a look
The draft Form W-4 is available on IRS.gov, as are the draft instructions. Revised versions are expected at some point in mid-August.
Provided By: Accounting Today