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IRS set to muck with witholding again!

By zzyzzx following x   2019 Apr 9, 11:20am 339 views   5 comments   watch   nsfw   quote     share    


https://finance.yahoo.com/news/another-tax-headache-ahead-irs-100101435.html

You finally finished your taxes and are learning – for better or worse – the ins and outs of the new law.

But wait, the law isn’t done with you. There’s another complication coming out later this year: The Internal Revenue Service is changing how you adjust your paycheck withholdings, and early indicators show it won’t be easy.

The agency plans to release a new W-4 form that better incorporates the changes ushered in by the new tax law so that the amount held back for taxes in each of your paychecks is more accurate.

But the changes won’t be simple, says Pete Isberg, head of government affairs at ADP, the payroll and human resources company.

Filling out the new form will be a lot like doing your taxes again.

“It’ll be a much bigger pain,” he says. “The accuracy will be 100 percent, but the ease-of-use will be zero.”

While the new form hasn’t been released yet, the IRS last summer put out a draft version and instructions seeking feedback from tax preparation companies and payroll firms. Instead of claiming a certain amount of allowances based on exemptions – which have been eliminated – the draft form asked workers to input the annual dollar amounts for:

Nonwage income, such as interest and dividends
Itemized and other deductions
Income tax credits expected for the tax year
For employees with multiple jobs, total annual taxable wages for all lower paying jobs in the household

“It looked a lot more like the 1040 than a W-4,” Isberg says.

The new form referenced up to 12 other IRS publications to fill it out. It was so complex and different from the previous W-4 form that Ernst & Young worried employees would struggle to fill it out correctly and employers may need to offer training beforehand.

The tax and payroll community expressed many concerns about the draft form aside from its complexity.

Many cited privacy issues because the form asked for spousal and family income that workers might not want to share with their employers. Other employees may not want to disclose they have another job or do side work outside their full-time job.

To avoid disclosing so much private information, taxpayers instead could use the IRS withholding calculator, but it’s “not easy to use and the instructions are confusing,” according to feedback from the American Payroll Association.

In September, the IRS scrapped plans to implement the new W-4 form for 2019 and instead is planning to roll it out for 2020.

Another draft version of the new W-4 is expected by May 31, according to the IRS, which will also ask for public comment.

“We encourage taxpayers to take advantage of that opportunity and send us comments on the redesign,” says agency spokeswoman Anny Pachner.

The IRS will review the comments and plans to post a second draft later in the summer. The final W-4 version will be released by the end of the year in time for the 2020 tax year.

Once it arrives, you’ll probably need the following information on hand, says Kathy Pickering, executive director of H&R Block’s Tax Institute. That may mean lugging in past 1099 forms, paystubs or last year’s tax returns to fill it out correctly.

Your filing status
Number of dependents
Information about your itemized deductions such as home mortgage interest, state and local taxes, and charitable deductions
Earnings from all jobs
Information about nonwage income such as business income, dividends, and interest.

“If you’re married, and both you and your spouse work, it will also be helpful to know information about your spouse’s income,” she says.

You may also need to fill out a new state income withholding form. Many states use the current W-4 for withholding, but they may need to release their own forms, too.
1   HeadSet   ignore (1)   2019 Apr 9, 12:27pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Isn't the bottom line still the number of deductions you want to claim? This is just a fancier worksheet.

If they really wanted to help, get rid of "under withholding" penalties as long as tax is paid in full by April 15th.
2   SunnyvaleCA   ignore (0)   2019 Apr 9, 1:34pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

HeadSet says
If they really wanted to help, get rid of "under withholding" penalties as long as tax is paid in full by April 15th.


It would be great fun if people just had to pay their entire tax bill on April 15th. Imagine how many people would suddenly realize they had already spent ever penny they had. Imagine, also, the reaction for the tax donkeys who have a huge tax bill but get little in return.
3   zzyzzx   ignore (1)   2019 Apr 9, 1:49pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

HeadSet says
If they really wanted to help, get rid of "under withholding" penalties as long as tax is paid in full by April 15th.


At least in Maryland they make it easy. All you need to do is have withholding and/or estimated payments equal to or greater than last years liability. It's so simple. With the feds, you need to be withing 90% and less than $500 close enough to not get hit with penalties and interest, which is quite an onerous requirement.
4   HEYYOU   ignore (26)   2019 Apr 9, 3:24pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

But MAGA tax reform?
Why do Rep/Con socialists take from hardworking Republicans?
I forgot! Republicans get their total paycheck,no withholdings.
Trump/Republican managed to MAGA healthcare to be,cheaper & better.
5   Heraclitusstudent   ignore (2)   2019 Apr 9, 3:50pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

And then by default, withhold even less, so you (or your wife) spend(s) it, before hammering you next year when the time comes to do the math.

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