Who's had to fill this monster out yet?!?! OMG... like the IRS could make this any more complicated!
-So why did the IRS do this? Believe it or not, this new form was an effort to simplify the W-4 and increase transparency... Sorry to inform you IRS, this is an #epicfail! EPIC!!
Here's the real reason for the change: Remember that snafu last year where people who NEVER owed suddenly did? This is the fix for that. *Before you get mad about it, the bulk of those still paid less in taxes than previous years, but the withholding tables were messed up and caused this error.
The tax law changes took away the "exemptions" deduction from previous years and replaced it with the "Qualifying Children" deduction of $2000 and the "Other Dependents" deduction of $500. These changes, and the mess up last year, meant that the form had to change, along with the withholding tables.
Hopefully they have it right this year, but it never hurts to check on it periodically throughout the year to make sure. Here's the IRS Tax Estimator
**Just so you know, a child drops from "Qualifying Child" to "Other Dependent"
THE YEAR THEY TURN 17. Plan ahead parents!!!
The following is my attempt to walk y'all through this form, in layman's terms. Please feel free to contact me if you need more help, or if I can clarify anything! Or better yet, post the question on the Facebook post & everyone can get the answer ;-)
-STEP 1 (a&b)- this is pretty self-explanatory. Put the name on your Social Security card, address & SS number.
(C) Your options here are Single/MFS, HOH, or MFJ- This order goes from most withheld to least.
Let me dive into something here- As per the IRS, if you are married on 11:59 pm on 12/31, you are married for the whole year. Your two filing options are now Married filing jointly (MFJ) or Married filing single (MFS), period! There are very few exceptions to this.
*If you mark MFS but you're really MFJ, you will have quite a bit extra taken out of each check, and your refund should be larger.
*If you are MFS & check MFJ, you will get more of your checks, but you may end up owing at the end of the year... this is a dangerous game, be careful.
-There can only be 1 Head of Household (HOH) at each address (with very few exceptions). The qualifier is that they not be married, and maintain at least half of the cost of keeping a household- this includes rent, utilities, groceries, and upkeep. All income counts towards this- Wages, alimony, child support, WIC, etc... If you know you're the HOH, then check it. If there are any questions, I would check Single and be happy with little bigger refund.
-Single is pretty self-explanatory... I hope!
For those that still don't know what to check, here's a handy IRS Tool to help- IRS Filing Status.
YOU CAN STOP HERE AND WITHHOLDING WILL BE BASED ON THE STANDARD DEDUCTION AND TAXES.
It wouldn't be a horrible idea to do it this way for a few months and then check the IRS Tax Estimator to see how you're sitting. As long as you periodically check throughout the year, you can somewhat maintain control of your taxes.
STEP 2- You only need to worry about this second part if 1) Both you & your spouse work equally paying jobs, 2) you have more than 1 job, or 3) you or your wife has a side hustle that you're claiming on your tax return (you're supposed to claim all income by the way).
*This whole section is to have more withheld with the assumption that you, and your household, will have a higher income than just this one job.
Any marks in this section are going to take out more from each check.
-if #1 applies, you can check box (b). This is probably going to take out more taxes, but you should do this for BOTH jobs.
-if either of the other apply, you can go through the steps of the multiple jobs worksheet (p.3-4)
*If this step is too daunting for you, Step 4c is where you can just put a dollar amount to be withheld from each check to cover your extra income- if you're paid bi weekly & have an extra $10 withheld from each check, that's $260 for the year. If you're paid weekly, $10 extra is $520.
STEP 3- This step is going to decrease the amount taken out of each check. If you would like to have less taken out, each qualifying child (16 & under) is a $2000 deduction, any kids 17+ and other dependents you claim are a $500 deduction- multiply the number of dependents by the deduction and it goes on those two inside lines, add them up & it goes at the #3 there.
STEP 4- (a) This is where you could account for any other taxable income you receive- royalties, commissions, winnings, etc... If you want to have MORE withheld from your check, put the estimated additional amount of income here.
(b) The standard deduction for 2020 will be MFJ is $24,800, Single and MFS is $12,400, and HOH is $18,650. Honestly, I wouldn't mess with this section at all... I think I had less than 10 people itemize last season. Worst case scenario, you're going to get a little extra back because you had a deduction you didn't plan on.
(c) IF YOU WANT TO HAVE EXTRA WITHHELD FROM EVERY CHECK, YOU PUT THAT AMOUNT HERE.
There you go... Done. You've filled out the new W-4. Not too bad, huh?! Hope this helps!
As always, please reach out to me if you need your taxes done, or have tax questions.
Angelo Tax Service, 325-703-2112, AngeloTaxService@gmail.com.
If you have a suggestions for a blog topic, please let me know! It gets hard coming up with this stuff by myself. Lol!