The IRS has released a new draft version of the federal W-4. This new release aims to incorporate changes brought about by the Tax Cuts and Jobs Act. Most importantly, the intention is to improve the accuracy of the taxes withheld from each paycheck.
Highlights
- No longer relies on the concept of withholding allowances, which were tied to the amount of the personal exemption.
- The new form gives the option of providing annual dollar amounts for various pieces of information.
- Withholding for other non-wage income
- Dependents
- Tax credits
- Additional marital status options
- Adds head of household
- Multiple Job considerations
- If lines are left blank, the ‘default’ withholding amounts are different than in previous versions
What’s next
According to the IRS, they are currently seeking comments on the new form from tax payers and employers. After the comments are reviewed, the plan is to post a second draft in late July. The final Form W-4 version is to be released by the end of the year. Stay tuned for additional updates and developments as this new form will be required for employees hired after 2019 or current employees who wish to make changes to their withholdings for pay dated Jan 1st, 2020 or later.