30 Jan IRS Introduces New Online W4 Withholding Estimator for 2020
The enhanced Tax Withholding Estimator unveiled by the IRS last week is a result of recent tax changes and is designed to help taxpayers fill out the new W-4 withholding form. Hopefully, it will also circumvent the problems many tax filers experienced in early 2019 when, much to their dismay, they discovered they owed more taxes or received less of a refund than they expected.
No Surprises: New & Improved Tax Withholding Calculator
Under TCJA tax changes, starting in 2020, income tax withholding will no longer be based on a filer’s marital status or withholding allowances. Instead, it’s generally based on the taxpayer’s expected filing status and the standard deduction for the tax year. Employees may also choose to have the Child Tax Credit, itemized deductions, and other tax benefits reflected in their annual withholding.
The IRS is urging all taxpayers to use the new estimator to determine if they need to adjust their withholding parameters. If an adjustment is called for, the calculator gives specific recommendations on how to fill out an online Form W-4. You can also download a PDF version with key parts already filled in.
If a taxpayer works more than one job during the same tax period, the IRS is urging them to adjust their withholding instructions to avoid
having too little withheld. Workers may also continue to have a flat-dollar amount withheld from their paychecks to cover income they get from another source that’s not subject to withholding but may be subject to federal taxes.
According to IRS Commissioner Chuck Rettig, the new estimator was developed to “make it easier for people to review their withholdings.” He calls it “part of an ongoing effort by the IRS to improve quality services” as the agency modernizes its taxpayer relationships. All you need to get started is:
- Estimate for 2019’s income
- Number of children you’ll claim for the Child Tax Credit
- Itemized deductions you intend to take
- A copy of 2018 form 1040
If you’d like to learn more about these recent tax changes or the new IRS withholding estimator, contact KEGA CPAs online today or call us at 772.231.6902 to schedule a consultation.