The Internal Revenue Service is continuing to tweak tax forms, releasing yet another version of the document workers use to figure out their paycheck withholding.
The new draft of Form W-4, updated as of Aug. 8 and shown below, incorporated suggestions that Treasury and the IRS got on the version it made public at the end of May.
The changes are being made (again) to ensure that taxpayers adjust their withholding to most accurately reflect the tax code changes made by the Tax Cuts and Jobs Act (TCJA).
So what's new on the latest draft?
Taking all your earnings into account: Step 2 of the form, where you estimate the amount of income subject to withholding, makes it a bit clearer in its title that this where you take into account money from multiple jobs as well as income from a working spouse.
This W-4, as the form always has, still reminds filers that when you have multiple jobs or a working wife or husband, your combined withholding will be most accurate if you make any necessary paycheck withholding changes on the highest paying job.
An oldie-but-goodie piece I did years ago for Bankrate.com looks at couple bonding through tax withholding.
New withholding tool noted: This latest revision, however, does take into account a new IRS online tool.
The W-4 now encourages taxpayers to use the IRS' new Tax Withholding Estimator, which I blogged about last week, to come up with the most accurate withholding amount.
If you don't have access to a computer to use the online withholding tool, the multiple jobs worksheet is still a part of the form.
Clearer design: Overall, the latest iteration of the 2020 Form W-4 looks a bit cleaner.
The text has been rewritten or condensed, meaning fewer lines and more white space that makes it easier to read.
Treasury took note of these latest revisions in a statement announcing the tweaks.
The re-designed Form W-4 uses a building block approach, said Treasury, that "replaces complicated worksheets with straightforward questions that make it easier for employees to determine a more accurate withholding."
And while the new W-4 uses the same underlying information as the old design, this latest version uses a more personalized, step-by-step approach to better accommodate individual taxpayer needs, the statement added.
Secretary Steven T. Mnuchin also lauded the form and the work that his and IRS staff put into producing a "more accurate, transparent" W-4 that "simplifies the tax withholding experience" for most filers.
Old W-4 info still valid: If you've already given your employer or its payroll processor an old version W-4 and you're confident it is correct for your tax and financial circumstances, don't worry about these changes.
Treasury says you're not required to submit a new W-4 simply because of this redesign.
The Department did, however, want to get these changes out now so that everyone involved in paycheck withholding, primarily those folks responsible for administering it at companies, have plenty of time to learn about the new form and update their systems for 2020.
Withholding tables with the annual routine inflation adjustments for the coming year, noted Treasury, will be released as usual in November.
Almost the last word: Treasury also said that this W-4 version is expected to be the final one, aside from aforementioned minor updates for inflation.
However, the draft form itself does note that Uncle Sam is taking comments on the latest changes.
If you have any thoughts on how the W-4 can be refined yet again, email them to WI.W4.Comments@IRS.gov by Sept. 9.
You also might find these items of interest:
- 5 tax refund myths busted
- Withholding changes and other wedding tax tips
- Tax refunds are nice, but savings provide a better payoff