Form designed for more accurate withholding
The latest draft version of the new 2019 Form W-4 has many changes due to the Tax Cuts and Jobs Act.
Although the final form isn’t ready just yet, it’s important to get a heads-up on what’s coming. Here’s a rundown of the updates so far.
For starters, there are several changes to Line 3, which indicates the employee’s filing status. Workers will be able to select from three checkboxes: “single or married filing separately,” “married filing jointly”, or “head of household.”
Much of Form W-4 form Line 5 on has been revamped entirely. There’s no longer a line asking for the total number of allowances claimed (since this will be determined by the worker’s filing status).
The new Line 5 asks employees to enter the total amount of any nonwage income they receive that’s not subject to withholding, including interest and dividends.
On Line 6, workers will list any itemized or other deductions they expect to list on their returns, such as mortgage interest or state/local taxes.
Employees will list any expected tax credits for the year on Line 7, including the updated child tax credit.
Line 8 asks for the worker’s total pay from lower-paying jobs. This line should only be completed if the worker has multiple jobs at the same time or if the person is married and filing jointly and both spouses work.
Line 9 asks for any additional withholding from each paycheck, if applicable. Those who believe they’ll be exempt from tax liability will fill out Line 10.
Boxes 11-13 are the same as boxes 8-10 on the 2018 Form W-4.
Important: On the new Form W-4, Lines 5-8 ask for full year estimates of allowances and credits. Previous forms only asked for withholding estimates by pay period.
This means payroll systems will have to be upgraded to take annual estimate that impact withholding into account.
As the IRS finalizes the 2019 Form W-4, I will continue to keep you posted.
More info: irs.gov/pub/irs-dft-iw4—dft.pdf