IRS Unveils Second Draft W-4
The Treasury Department and the Internal Revenue Service have unveiled a new draft of the W-4 withholding form that addresses some of the concerns with a previous draft.
The proposed draft aims to reflect the changes resulting from the Tax Cuts and Jobs Act of 2017, particularly those around personal exemptions, and so it is not based on the current concept of withholding allowances. Instead, it asks taxpayers to account for income from multiple jobs, if applicable, and for other income not automatically subject to withholding, and to claim any dependents.
The new form will not be applicable until 2020, and taxpayers will not be required to submit a new form if they are content with their current withholding.
The IRS posted a FAQ covering major points for both employees and employers here.
An earlier draft was proposed in the summer of 2018, but there was significant pushback from stakeholders, including groups representing accountants and tax practitioners. Both the American Institute of CPAs and the National Association of Enrolled Agents, for instance, expressed concerns that the original draft required employees to share too much private information with their employers. (See “NAEA sees lots of problems with new Form W-4.”)
The IRS eventually decided to go back to the drawing board, and to put off introducing a new W-4 until 2020.
“The new draft Form W-4 reflects important feedback from the payroll community and others in the tax community,” said IRS Commissioner Chuck Rettig in a statement. “The primary goals of the new design are to provide simplicity, accuracy and privacy for employees while minimizing burden for employers and payroll processors.”
The service wants to have a near-final draft by mid-to-late July, so it is only accepting comments for 30 days. It expects to release a set of related instructions for employers in the next three weeks.
Provided By: Accounting Today