The new 2020 W-4 Form. What shall we do?

Now that tax season is underway we may find a few of you may need a bit of adjustment to your W-2 withholding.  So just like always just give your employer a new W-4 form and change the number of exemptions and your filing status. Right?  No Wrong!

IRS has radically changed the W-4 form. No more exemptions. Simpler? Kinder? Easier to fill out? No. In fact extremely confusing. The good news is if you already have a job and like your withholding the way it is, you can keep it (shades of Obamacare).

The problem is what if you want to decrease your withholding to get less of a refund or increase it so that you have more tax withheld because you owed tax on this year's return. Or what if you take a new job? All bets are off and "if you like it you can keep it withholding" is out the window and you have to start from scratch.

Step 1 is the easiest part of filling out the form: note your filing status which will determine your withholding, Single, Married, or Head of Household. Keep in mind that we have have already advised some of our married clients to use the Single status anyway as there withholding was always short.    

Step 2 Sends you to a multiple jobs work sheet because just like Cheech Marin you must have three jobs or well, at least a spouse that works too.


 Step 3 Identifies whether you think (Yes? No? Maybe?) you'll be entitled to the $2,000 child credit and $500 credit for other dependents.

Step 4 Is probably the most sensible part of the form all together. 

a) What other income do you have? Interest,? Dividends? Uber?
 (OK we'll try and withhold on that too!)

b)  Deductions - this is messy. This line attempts to ask you if you are itemizing and if so how much will it be in excess of the standard deduction.  Too much thinking is required for this line I think.  If you have to fill out a new W-4 form, maybe it's better to just leave this blank for many of you.

c) Yes please withhold extra. Oh this is a good idea, especially if you owed money last year or there is some extraneous circumstance.  Our concern is if you are filing the W-4 to just do this it will not work as it will through  your "if you like it you can keep it withholding" from your job into a tailspin. Thus the job withholding will start on the new system from scratch.


One more thing. If you think this is just too hard to fill our on your own, IRS has a web application that will estimate your withholding needs and fill out the W-4 form for you.  We've tried it ourselves and find it difficult to use and we feel it could mess you up even more. Hopefully we've gotten it right last year and you won't need to change anything.

 Call us if you are a client and have any questions.