The IRS has proposed an update to the Form W-4 it says will increase its accuracy, reduce its complexity and help avoid surprises at tax time. However, experts caution that it will feel different to employees and may prove a bit more difficult for some.
Employees currently fill out a one-page form that asks a few questions about their household to help their employer determine how much to withhold from their pay for federal taxes. Any more complex legwork takes place on worksheets not every worker must complete.
Under the proposed update, released this morning, employees would still face a one-page form with a simple default option. But those with dependents, working spouses, second jobs or income from other sources will need to do a bit of legwork if they want an accurate amount withheld.
“It’s going to be a little more work than people are used to,” said Pete Isberg, vice president of governmental affairs at ADP, a payroll services provider.
The form is divided into five steps. Some people will opt to complete only the bare two-step minimum: personal information and signature. Others will want to run through the other steps to get a more accurate withholding, which will require information more akin to what you need to complete your taxes.
The IRS is making the update in the wake of the overhaul of federal tax law, which did away with the personal exemptions that are the backbone of the current W-4. A new version of the form was needed so a more accurate amount is withheld from pay for workers.
The proposed draft is open to public input until July. A final version will take effect in 2020. Existing employees will not have to fill out the new form, but new hires or anyone wanting to update their information will use a new form starting Jan. 1.
Read the full story from The Associated Press.
