The Internal Revenue Service recently unveiled a draft version of Form W-4, Employee’s Withholding Allowance Certificate. The revised form is in response to changes made by the Tax Cuts and Jobs Act and aims to provide simplicity, accuracy and privacy for employees while minimizing burden for employers and payroll processors. It is open for review and feedback until July 1, 2019.
We want to remind our clients that this is only a draft and the new form will not be used until 2020. However, we are closely following this and will continue to provide updates. Below is a high-level summary of what we know so far.
What’s being proposed? The new form will account for:
- Multiple sources of income within your
- Claiming dependents, specifically factoring in
the $2,000 child tax credit for each kid under 17 or the $500 credit for other
- Providing additional details of income that
didn’t have taxes withheld upfront such as interest, dividends and retirement
- The number of deductions you anticipate to
claim, thus reducing your withholding and allowing you to take more money home.
The final draft is expected to be released mid-to-late July.
We will continue to monitor changes to Form W-4 and keep you abreast. In the
meantime, we encourage taxpayers to make sure they have the right amount of tax
taken out of their paychecks and thus avoid a larger tax bill next year.
Taxpayers with major life changes, including marriage or a new child, should
especially check their withholding amounts.
Determining how much to withhold depends on your unique
financial situation. The professionals at Hamilton Tharp can help, call us
today for a paycheck checkup.