Tips For Taxpayers Who Need To File A New W-4

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Any bookkeeping, business or tax article contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor can it be used to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.

All taxpayers should review their withholding annually. They can use the IRS Tax Withholding Estimator to check and make sure they’re not having too little or too much federal tax withheld. This tool offers workers, retirees and self-employed individuals a step-by-step method to help figure out if they should adjust their withholding.

Those who need to adjust their withholding should submit a new Form W-4, Employee’s Withholding Certificate to their employer.

People who should check their withholding include those:

  • who are part of two-income families
  • working two or more jobs or who only work for part of the year
  • with children who claim credits such as the child tax credit
  • with older dependents, including children age 17 or older
  • who itemized deductions on their 2019 tax return
  • with high incomes and more complex tax returns
  • with large tax refunds or large tax bills for 2019
  • who received unemployment at any time during the year

The IRS Tax Withholding Estimator can help taxpayers check their withholding.

  • This tool will help determine if they should complete a new Form W-4.
  • It will also help users determine what information to put on a new Form W-4.
  • It will save them time because they don’t need to complete the form worksheets. The Estimator does the worksheet calculations.

Taxpayers who complete a new Form W-4 should submit it to their employer as soon as possible. With withholding occurring throughout the year, it’s better to take this step sooner, rather than later.

People should generally increase withholding if they hold more than one job at a time or have income from sources not subject to withholding. If adjustments aren’t made for these situations, they will likely owe additional tax and possibly penalties when filing their tax return.

On the other hand, people should generally decrease their withholding if they are eligible for income tax credits or deductions other than the basic standard deduction.

Having the most recent pay statements, information for other income sources and the most recent income tax return can help taxpayers use the Withholding Estimator to figure out their correct withholding.

They might also need to adjust their state or local withholding. They can contact their state’s department of revenue to learn more.

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