Changes are coming to W-4 form. Here's what you need to know.
SAN ANTONIO – National Payroll Week, which runs from Sept. 2-6, was founded by the San Antonio-based Payroll Association to celebrate workers and the payroll professionals who pay them. The Alamo Chapter of the American Payroll Association is hoping to use this time to prepare workers for a new, revised W-4 form for next year.
It's a significant change. The Internal Revenue Service has issued a major revision to the 2020 W-4 form.
The form is now called a “Withholding Certificate," and it doesn't use number of allowances. Instead, the new W-4 form, which becomes effective Dec. 31, 2019, will be more income-based and you will need more information about your tax status to fill it out.
“What it will use is the employee’s income. It asks for number of dependents, additional income and using all of that to determine how much total tax will be withheld for the entire year," said Emma Jackson, government liaison for the Alamo Chapter of the APA. "Things that they never had to consider in the past are now a part of that form, so what may have been maybe a 10-minute document to complete may take a little bit longer because you have more information that will be required.”
Jackson said this week may also be a good time for you to look at your withholding.
“Due to the 2017 Tax Cut and Jobs Act, many employees saw a reduced refund or had to pay," Jackson said. "So it’s a good time to look at a paycheck using the Internal Revenue Service tax withholding estimator.”
You can visit IRS.gov and click on "Do a Paycheck Checkup Now" to calculate your withholding. You will need a recent pay stub and a tax return from last year to use the IRS' estimator on the site.
"Once they complete that, the employee will see either they need to increase their tax withholding for the remainder of the year or maybe they are good where they are at, so they stay put," Jackson said.
Jackson said if you need to make changes, you need to complete a new W-4.
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