The IRS has been trying to release a W-4 that more closely reflects the changes in the Tax Cuts and Jobs Act (TCJA) that was passed in 2017. These changes made by the TCJA affected itemized deductions that were normally claimed on a Schedule A and eliminated personal exemptions. While the IRS did give us a new W-4 in February 2018, this new form did not cover situations for all taxpayers. In June of 2018, the IRS released another draft version of the W-4 for 2019. Unfortunately, that draft was also met with criticism from tax professionals who felt that the form still wasn’t enough to protect taxpayers from claiming the wrong withholding. Taking the criticism to heart, the IRS did not release a 2019 W-4. Additionally, the IRS announced that penalty relief might be available and, in March of 2019, the IRS expanded the relief for those taxpayers making payments of at least 80% of the tax shown on the return for the 2018 taxable year. Despite the penalty relief, concerns about withholding remained.
Yet Another Draft
Because of these concerns, W-4 revisions have remained a priority to the IRS. This morning, the IRS premiered another draft version of the W-4 to be used in 2020. That draft can be viewed here (downloads as a PDF). The draft form is a little bigger than the older W-4 – taking up a whole page and including additional worksheets.
“The new draft Form W-4 reflects important feedback from the payroll community and others in the tax community,” said IRS Commissioner Chuck Rettig. “The primary goals of the new design are to provide simplicity, accuracy and privacy for employees while minimizing burden for employers and payroll processors.”
While the IRS may believe this form is more simplistic, they want you to account for multiple jobs within your household, including whether you held more than one position or you and your spouse work and file jointly. Another section asks taxpayers to claim their dependents and to include the $2,000 child tax credit for each child under 17 or the $500 credit for other dependents. Additionally, taxpayers can use this form to clearly outline other types of income that didn’t have taxes withheld such as interest, dividends, or retirement income. Lastly, you can list the number of deductions you expect to claim if you think you’ll be itemizing.
For many, this form is anything but simplistic.
What About 2019
As we approach the mid-year point, we are running out of time for taxpayers who may have been unhappy with their 2018 tax return. “Two-income families and people with multiple jobs may be more vulnerable to being underwithheld or overwithheld following these major law changes,” the agency said in a statement.
In order to feel more certain about your 2019 return, we suggest you work with your CPA or take a look at the IRS Withholding Calculator to figure out how much to have withheld from your paychecks.
More Changes Coming
Although the IRS has given us a new draft to review, they are taking public comments at WI.W4.Comments@IRS.gov. Comments should be submitted before July 1, 2019 and they won’t be responding to any comments. The IRS is planning to release employer instructions soon. They advise that you see this website for the latest Form W-4 information and this website for the latest information on employer instructions.
