Your IRS W-4 tax withholding form just got a makeover – here’s what is new!
If you are starting a new job next year or if you want to adjust the amount of income tax withheld from your paycheck, the form that you’ll have to complete and give to your employer will look much different.
Form W-4, which instructs employers how much tax to withhold, got a makeover for 2020 from the Internal Revenue Service.
The redesign reflects changes to the federal tax code from the Tax Cuts and Jobs Act, which took effect last year. The update, the I.R.S. said, “reduces the form’s complexity and increases the transparency and accuracy of the withholding system.”
The new design may at first appear daunting, said Pete Isberg, vice president of government affairs with the payroll processor ADP, but overall “it’s a lot more straightforward.”
Still, it’s a tax form. The American Payroll Association, an industry group, has warned employers that explaining the new form to workers may be “challenging,” and has provided a sample letter to help guide employees.
Accurate paycheck withholding is important because if too little money is deducted, you may face an unwelcome bill — and possibly a penalty — at tax time. Ideally, tax experts say, the amount withheld should roughly match the amount of tax owed.