2020 was a year that yielded many changes; among those, were your W-4 forms. You may or may not have known about this, as it wasn’t required you fill out a new form. However, there are some changes to be aware of that could affect your upcoming tax return.
Out with the Old, In with the New
We’ve all heard it before, the age old saying, “If it ain’t broke, don’t fix it.” So why did they? As the W-4 was created to help you break even, they’ve attempted to make things simpler and more accurate. And while the new form may be simpler in number of steps, it can feel a bit more complicated in comparison to the old form, we knew and loved. Let’s go through the form step by step to ensure you’re filling this out accurately.
Step 1
Much like the old form W-4, step 1 is basic demographic information. One of the major differences is the filing status. If you notice, the filing status options are as follows:
• Single or Married filing Separately
• Married filing jointly (or qualifying widow(er))
• Head of Household
Of course, you’ll want to select accordingly. It’s important to mention here, if you are married filing jointly and don’t include all other income, it will put you in a lower tax bracket, resulting in a lesser amount being withheld. Next, you will observe they emphasize to complete steps 2-4 ONLY if they apply to you. Don’t worry; Ned already knows your next question; Does it apply to me? Visit ‘Step 2-4’ to find out.
Step 2-4
You’ll want to complete step 2 if you hold more than one job or are married filing jointly and your spouse also works. The correct amount of withholding will be dependent upon income from all your jobs (and your spouses’ jobs) combined. If you have only two jobs, you’ll be able to select the box under 2c, but it may also be a good idea to complete the ‘Multiple Jobs Worksheet’ on page 3, to get an accurate idea of how you will come out when filing your taxes.
Now, for those who have children you will use step 3 to claim your dependents; those under the age of 17, and all other dependents. You’ll add the amounts listed in a and b, and you’ll list the total amount in c.
We will look at step 4 in three parts (a, b and c).
4a) If you’re a taxpayer that normally carries interest, dividends and retirement that won’t have withholding, you may want to consider reporting it early.
4b) If you’re a taxpayer who knows you’re able to itemize and won’t be taking the standard deduction, you can report your average deduction amount here, so less withholding will be taken out.
4c) If you’d like any additional withholding taken each pay period, as ‘insurance’, you’ll place that amount here.
Finishing up, you’ll need to complete step 5, which is just your signature and the date. Once this form is completed and submitted to your employer, you’ll want to check and make sure the correct amount of withholding is being taken out. You can do this, by checking your paper or electronic paycheck stubs/statements.
We hope you find this information helpful as you begin to prepare for the upcoming tax season. Listed below, you will find some links with commonly asked questions about the new form W-4. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more!
LINKS
http://www.irs.gov/newsroom/faqs-on-the-2020-form-w-4
Ned Jackson Downtown Office
Address
255 N Liberty Street
Jacksonville, FL 32202
Phone
(904) 356-0349
Email
info@nedjacksontax.com
